Replies to post #47184 on High Wire Networks Inc (HWNI)

[jetlife84]

Look at the loan terms, it'll freak you out more than the term "toxic". Junkhustler has done a good job posting these terms, which again, are in the SEC filings. I'm not going to dig them up for you. Maybe if junkhustler is feeling nice he'll do so for you.

[drugmanrx]

Basically it is "convertible debenture"

DEFINITION of 'Convertible Debenture'

A type of loan issued by a company that can be converted into stock.

DEFINITION of 'Toxic Debt'

Debt that has a lower chance of being repaid with interest. Toxic debt is toxic to the person or institution that will receive the payments.

This debt generally adheres to one of the following criteria: default rates for the particular debt are in the double digits, more debt is accumulated than what can comfortably be paid back, the interest rates of the obligation are subject to discretionary changes. Any debt could potentially be considered "toxic," if it imposes harm onto the financial position of the holder.

The lower the share price the more shares that are needed to repay the debt IF the company can not repay the loan back with cash and interest.

The more shares issued to pay the debt causes the share price to fall requiring yet more share needed to repay the same amount of debt, as this cycle continues share price continues to fall leading to the term death spiral, as share price dwindle towards zero.

From Larry past history, and considering the actually amount of money owed Mantra is far from this occurring in the near future.

BREAKING DOWN 'Toxic Debt'

Debt is not always bad, especially if you are the lender and the borrower is making the payments. If the payments on these loans stop coming in, or are expected to stop, the debt becomes known as toxic debt. The historical costs of toxic debt securities are higher than the current market price. This can often result from unjustified high credit ratings which implies that the risk of default on the security is much lower than fundamental analysis would suggest. Junk bonds are not classified as toxic debt upon purchase, because the buyer is aware of the underlying risk of these securities.

Read more: Toxic Debt Definition | Investopedia