It suggests that they kept on increasing the volumes and hit the uncommitted borrowing base of the working capital facilities. Sounds odd/reckless, as they should have had some fairly good ideas of funding demand in January and I imagine some on-going discussion with Meydan. It also confirms the limitation of this type of business where continuing growth is very capital intensive. And unlike a traditional lender, you can't easily press the pause button as you then lose market share very quickly with merchants & consumers. Still, there is a breakdown somewhere, as both Meydan and Fortress must have accepted back 3-5 months ago that this business had to grow to have any chance of profitability. The capital requirement projections are not so difficult to come up with... So my guess is that some parties are trying to take over (Meydan or Fortress). Or current management tried to bully for more capital. In any case, not good for shareholders.
OPY Price at posting:
19.5¢ Sentiment: Hold Disclosure: Held
