Here's the main challenge, swf83:
Prospect owes $128 million to Karlsson, among other debts. The Karlsson debt was pushed up to 2015, a good thing. In granting that, however, Karlsson imposed some strict conditions: First, various developmental milestones must be accomplished along the way to 2015. If even one milestone is not met, Karlsson can call in the note and collapse Prospect. Secondly, most of the new funds raised by Prospect must go towards paying the Karlsson note. Since it will cost lots of money to reach the various milestones, and since Prospect is restricted from raising much money for such developmental work, the risk to Prospect as an ongoing concern is high.
Read the most recent sec filing for yourself. It can be found at the Prospect website. Go to investors and then to sec filings.
If I were Karlsson, I'm not so sure I would want Prospect to make its payment to me. The potash underneath Prospect's land is worth billions and billions of dollars. It is also in a strategic location from a demand and marketing perspective. If I were Karlsson, I might prefer the land and its potash to the cash owed on the note. That is, I might want Prospect to default.
