Happy to play along, oltimer.
Please explain what happens on December 12, 2020 when the company must repay $5 million to its secured debtholder?
YGYI doesn't have enough cash to make this payment and cannot arrange a refinancing. The secured debtholder lacks any incentive to restructure his debt. The company can't offer new collateral, can't make a partial cash repayment on the note of any size, and the company is likely continuing to burn cash.
If the company's future looked positive, and there's no reason to think the company's future looks positive, the debtholder could agree to convert some debt into stock in a transaction that would severely dilute equity holders.
If the company converted a mere $2.5 million of debt into equity at $0.30, the company would need to issue 8.3 million shares ($2,500,000/$0.30). The company has about 30 million shares outstanding, so that transaction would increase the share count by almost 30%. This is a good transaction for current equity, only relative to a bankruptcy, but would drop the share price to $0.20.
Why someone with a secured claim would give up any of that for an equity claim on a company like YGYI is inconceivable. For that reason, the likely outcome to this is a bankruptcy. Not saying it's the only outcome, but a very likely one.
How, oltimer, does the debtholder and the Company resolve the repayment issue on December 12, 2020 and avoid bankruptcy? It's a question for you to answer if you claim the company will not file for bankruptcy protection.
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