Numbers to chew on.
CII F/Y '99 Gross Sales = $1,195.159
CII F/Y 2001 Interest on convertible loan will be CDN $363,750.
Also, if the European investment group headquartered in Geneva, Switzerland, decides to convert the loan into shares rather than get repayment, they will own 'roughly' 3 million shares of CII by the end of year three and will have paid to CII close to an additional $CDN 1.8 million. (i.e. total to company will be $3.6 M. - (10% of $3.6 M.) + ~ $1.8 M. = ~ $5 M. net)
This is derived from the following statement in the PR: " The principal amount of the loans will be convertible into units (each unit consisting of one common share and one-half non-transferable share purchase warrant) at the rate of $1.25 per unit in the first year, $2.00 per unit in the second year and $3.00 per unit in the third year. However, no more than one-third of the principal amount may be converted during each year. Each full warrant will be exercisable for one common share, for a period of two years (but not beyond the maturity date), at an exercise price equal to the applicable conversion price at the time of exercise."
Somebody is clearly expecting CII to grow considerably over the next year to permit this type of loan transaction to occur. After all, the main things a debenture holder wants to assure themselves of are the following:
1. the interest payment can be paid on time in full, and
2. the principal of the loan (debenture) is not at risk.
Please correct me if I'm seeing this thing thru 'rose coloured glasses', but I see a HUGE SURGE in product sales coming in the near future based upon on this latest deal with the European investors and yesterday's PR.
Brian
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