The need to raise additional capital is clearly stated in the Term Sheet/Proposal, which is part of today's 8-K SEC filing.
The requirement is to attain an additional $300 million equity investment which they will not be able to get with sub dollar shares. The r/s was a necessity to attain the equity investment and is likely the primary reason for the r/s.
From the 8-K:
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Capital Event:
As a condition to the continued effectiveness of the concessions contemplated by this term sheet, (i) on or prior to December 31, 2010 (or such later date as TNFINC may agree in its sole discretion) the Company would have entered into definitive documentation with respect to, and (ii) on or before March 31, 2011 (or such later date as TNFINC may agree in its sole discretion) the Company would have consummated a capital transaction that results in, an additional equity investment in the Company of at least $300 million or such other amount as shall be acceptable to TNFINC based upon an opinion from a financial adviser satisfactory to TNFINC addressed to the Company and which may be relied upon by TNFINC.
Notwithstanding the foregoing or the matters set forth under the caption Revolving Credit and Term Loan Facilities, if the Company can demonstrate financial sustainability, including adequate liquidity on a pro forma basis post transaction, TNFINC may in its sole discretion deem the requirements set forth under this caption and the caption Revolving Credit and Term Loan Facilities to have been met.
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