TRII has a financing problem. The two most recent actions to raise funds are a convertible note(s) from November, 2013 and subscription offering on July 3, 2014.
The Nov. note(s) are convertible at a 60% discount to market. That certainly qualifies as toxic. The subscription is at $0.02. The drawdown facility has apparently stopped being used.
Most of the debt notes with the Angelo Boujos entities (he was also prior president of Trio Resources AG......) were established prior to KMAG getting suspended, so the conversion terms are actually quite bad given the current pps. That is probably why the draw down facility is no longer used, Angelo probably won’t let him.
He has about $350K left in the subscription agreement he can tap, but given the pps is where it is I would suspect that may be problematic.
That leaves the loan facility with a 60% discount conversion feature…and that is toxic.
Why does this matter? Because he has to spend $300K on the Teck option by Sept 30, 2014 or he loses it. He has already reduced his “corporate expenses”…but the interest on the notes is piling up and a lot is coming due by the end of the year.
He has no revenue stream to speak of.
Since the Trio Resources AG/Allied R/M was planned and well advanced by September 2012, ie. most of the note’s terms had been set, the KMAG suspension threw a large monkey wrench into the works. The conversions for the notes established prior to going public had envisioned a conversion within 30 days of going public at a 20% discount to the initial price…which would be about 0.45. But the problem was there was very little volume probably because of the mess JDR was in with KMAG. Now the pps dropped and is around 0.04 and so the notes have not been converted since they common would be sold at a loss. Now they are coming due.
This is going to get interesting.
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