Yep, clearly nothing to see here. They are just finalising a refinancing transaction.
Of course they don't need to call in VA if they have reasonable grounds to suspect a solution to the solvency issues will be achieved. Continuing discussions support this reasoning and AB has shown in the past he has been willing to dip into his own pockets to keep the company solvent.
But what happens when interest payment falls due in next fortnight?
What happens if a trade creditor has not been paid and takes action?
Must assume unless company advises otherwise that Ganfeng took it's 30% rebate on the latest shipment. After rebate that shipment would only cover typical total company spend for 1 month (excluding interest payments).
As you said the words are important but they keep repeating themselves.
No doubt AJM would have liked refinance signed prior to release of Dec Quarter results.
For all it's success in ramping up production and achieving sales, AJM has become a victim of bad timing.
Management is excellent and what they have achieved with ramp up is commendable. Unfortunately the debt obligations are too high.
US$143m plus an interest payment of approx US$11m takes minimum refinance to US$154m before refinancing costs.
Bond holders will want to be sure AJM has sufficient working capital and ability to meet interest payments so would likely require a covenant with at the least a minimum cash on hand requirement of US$15m at all times.
Realistically I believe AJM is looking to finance the equivalent of US$200m.
It would appear best option for holders would be a debt for equity swap leaving a manageable level of debt around US$40-50m at say 11% plus LIBOR and an equity dilution of around 65%.
In any event, looking forward to seeing Dec Quarterly results for updated data and still wishing the best outcome for holders under these circumstances.
