Some loose comments,, in another stock chat room, associated with the $20 million loan facility with Global Investments, could be causing some concern for shareholders..
Under the terms of agreement, the Company must give 10 trading days notice of a draw down,and cannot draw more than $300,000. in any 10 trading day period..!
As a " repayment in full ",,the Company will issue shares to the financier,, to the value of the draw down,, calculated on a 2% discount to the lowest [ VWAP ] of AZZ shares traded on each of the ten days following the advanced notice..!!
So effectively,,, the debt is retired as it is created.! There is , of course, a dilution to existing shareholders..!!
The implications are,,, that if the Company draws down millions of dollars,, while the share price is still in the low teens,,, then not only will the dilution be unrealistically high,, but if the financier liquidates the shares on market,, then the absorbtion balance will be upset and inhibit the ability of the share price to advance past 20c...!!
Any shareholder who is concerned about the above,,, need not be,,,because it's not going to happen..!!
I refer those who are interested,, to the following:-
:- Annual Report :- Page-42 :- Notes to Financial Statements :- Note 19 :- Last paragraph.
Quotation :- "" Under the agreement, any trading day where the Company's share price [ VWAP ] is less than $0.2132 is excluded from the pricing period of a draw down and the draw down amount reduced accordingly. As at the date of this report, the Company's shares are trading below $0.2132, hence the Company effectively cannot draw down on the facility until the share price rises above $0.2132. ""
That's the facts...!!!!
Cheers..!
AZZ Price at posting:
0.0¢ Sentiment: None Disclosure: Held
