I hate having to repeat myself but I will. Using your numbers there is $6mCDN left to pay for admin., dep., etc.. This means negative earnings, read the S&P report. Do you really think that anyone will refinance after a year, based on those numbers? $35mUS is due after one year. Where will that come from?
So one more time. The senior creditors, whoever they are will be in the drivers seat. The subs may provide slightly better terms, but will take equity, because that will help protect their subordinated debs..
The only way the equity can appreciate is with a dramatic increase in the price of gold. I have done all my analysis using the financial scenarios presented by RYO, which are aggressive, not conservative. A $100 increase in the price of gold adds only $0.16/share in revenue, which could make RYO marginally profitable, but no barn burner. Refinancing would certainly be less problematic and cheaper at that gold price, but wouldn't have earth shattering results at the bottom line.
When companies get into the kind of financial trouble that RYO finds itself in, it is the lenders of last resort, that have the only chance at winning, and they stack the odds in their favour at the expense of every other investor.
Sincerely,
Al Cern |
