Agree with Wabbit on the costs.
BillOM also implied that bankruptcy was a possibility. Unless reserves are downgraded significantly, this would seem to be unlikely, as WF would have no reason to call in the loan while interest is being paid as and when. The borrowing is also being reduced. The facility runs until September 2021, so Freedom has time to implement whatever turn-around strategy it comes up with.
Unless Ramas concludes that the business is not viable, it will probably have to provide continuing support in order to at least recoup its $20million investment in pref shares. It is an unsecured creditor, although "the Company has guaranteed the redemption payment" [whatever that might mean if tested in court]. These are redeemable in March 2022. Although there are provisions for early redemption, if that was to occur while the WF loan was current, FDM probably couldn't comply. Hence, barring disasters, the Company should be safe for the next two years. Shareholder value is not so safe.
FDM Price at posting:
2.8¢ Sentiment: None Disclosure: Held
