<<But the company balance sheet is horrible and will not improved until 2-3 years after production.>>
All,
I like SSC at these prices and I would like to open up for debate whether its balance sheet is as horrible as it seems on first glance. The 1998 10K indicates long term debt is $42 million, of which $26 million is due in March 2000. This $26 million debt seems to be a convertible preferred issue with the conversion price being $1 per share pre-split or $8 post-split. The financial statements appear to imply that SSC can force conversion at $8 per share. Does this mean that when the bonds are due in March next year that SSC can force conversion of this $26 million debt into 3 million additional shares ?
This doesn't seem so bad at all, or have I misunderstood something ? I would appreciate any insights on this issue since this is obviously very important to SSC's financial survival. Here is relevant exerpt from the 10K:
5. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
(In Thousands)
<S> <C> <C>
8% Senior Exchangeable Notes due March 21, 2000 $ 26,082 $ 25,750
10% Senior Convertible Notes due November 24, 2002 15,000 15,000
9% Convertible Subordinated Debentures due July 15, 2008 1,515 1,515
---------- ----------
$ 42,597 $ 42,265
========== ==========
</TABLE>
In March 1996, SPMI issued $30 million aggregate principal amount of Senior
Exchangeable Notes due 2000 (the "Eurobonds"). In 1998, $1.5 million of the
Eurobonds were exchanged and canceled for 1.5 million shares of common stock.
The Eurobonds bear interest at 8% per annum and mature March 21, 2000. The
Eurobonds are exchangeable into a specified number of shares of Common Stock of
the Company at an exchange price of $1.00 per share, subject to reset and
adjustment in certain events. The Eurobonds may be exchanged at the option of
the holder at any time prior to maturity, unless previously redeemed. At any
time after March 21, 1997, and prior to maturity, SPMI may force the exchange of
the Eurobonds, in whole or in part, subject to certain restrictions.
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