Originally Posted by DENpilot
I'm not sure everyone fully understands...
IF the bondholders elect to exercise their repurchase rights, Mesa has the right to repay in stock. The amount of stock is calculated by using some 5 day average stock price. There is no choice for the bondholders as this was the terms of the early repurchase and since this move was approved by the shareholders, it is all kosher.
So, assuming all bondholders exercise their repuchase rights, at an average price of .28, it would take a little over 300 million shares to repay it.
^^^This is as simple as it gets.^^^
For those that aren't quite getting it
CLICK HERE and read the actual filing. Page 10 includes the table with a variable stock price (for those that keep talking about it becoming diluted). The $.28 is just what is being used now. Like DENpilot said the actual value will be based on a 5 day average. Again read the filing.
The bondholders have three options:
1.) Take the shares in lieu of cash (MESA has the right to do that, refer to the bottom of page 10 in the SEC filing).
2.) Not exercise their rights. Just because the bonds are due doesn't mean they have to collect on them, they can defer to a later time.
3.) Refuse the shares, demand cash, put the company in BK and hope to collect anything after all assets are sold. Like MESA really has that much to sell.
Of all the options, #1 is looking pretty good. At least you get something (well 900M tons of printed paper). Sell it for what you can get because it's really that or nothing at all.
OO.