First, I don't think this DBCO board has much effect on the stock price with only about 5 of us posting. And I'm still holding my little bit of DBCO shares.
As far as my statements regarding a cash crunch, I think the statements from the DBCO 10q printed below make that clear enough. Do you have some other way of describing these issues which you think are more accurate?
I don't think the game is over with Eco but as they state, the rest of the board approved the deal so its only a question as to whether they get those two heads "running" the company out of the way.
Read it carefully, and tell me there isn't a cash crunch. Why do you think DBCO wanted the immediate $5 mill followed by the $25 mill?
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Since November 1997, Davie has been engaged in the upgrade of the Spirit of
Columbus. The Company has yet to obtain financing for this project and has been
incurring costs on behalf of Davie of approximately $1 million per week. As of
the date of this Report, Davie has not received any progress payments for the
work performed. In order to reserve limited working capital, the Company has
determined to cut back on the scope of work authorized until such time as
progress payments are received and financing is in place.
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As of the fiscal year-end, the Company had a $30 million credit facility from
BTCC, of which $15 million was outstanding as of September 30, 1997. This
facility provided funding for the Company's acquisition of MDC. Subsequent to
year-end, the Company entered into a $40 million credit facility (the "BNY
Facility") with a syndicate led by BNY Financial Corporation - Canada ("BNY").
The BNY Facility was used to pay off BTCC and to provide working capital for the
Company's North American operation. The amount available to the Company under
the BNY Facility is based upon a percentage of the value of certain eligible
assets of the Company, including the MDC shares owned by the Company and the
accounts receivable, inventory and property, plant and equipment of the North
American operations. The BNY Facility matures in three years and bears interest
at a floating rate based upon BNY's prime rate. The BNY Facility agreements
provide for an acceleration of the maturity date in the event of an "Event of
Default" (as such term is defined in the BNY Facility agreements). An Event of
Default includes failure to pay when due any installment of interest on or
principal of the Facility and any failure to observe the covenants provided in
the BNY Facility agreements, including certain financial covenants.
The BNY Facility contains various financial and other covenants including
maintaining a minimum shareholders equity of $52 million as of September 30
and December 31, 1997. This covenant was not met on these dates and constituted
a technical default under the BNY Facility. The Company has negotiated waivers
for these defaults. The Company is currently negotiating a waiver of or a
revision to the shareholders equity and other covenants contained in the BNY
Facility for the remainder of fiscal 1998. There can be no assurance that such
negotiations will result in a waiver or revision of such covenants. The
Company's failure to successfully negotiate such waiver or revisions would
adversely affect the Company's ability to obtain necessary working capital and
would have a material adverse effect on the continuing operations of the
Company.
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