Apparent Insolvency, Part III
OK, lets try this from one other perspective. Assume ALL of their current liabilities don't have to be paid right away. Let's just look at cash.
They've got $500,000 in cash, which happens to be collateral on a loan of the same amount. So, can't spend that.
They've got 1 million shares of MGAU, current value of 46 cents, or $460,000.
They say MGAU owes them $240,000, but MGAU says IPM owes them $50,000. So, I wouldn't count on the $240,000 "owed" by MGAU.
I was wondering why the heck would they borrow $500,000 when the collateral for the loan is the loan proceeds. The answer, obviously, is for short-term liquidity so they don't have to sell all their MGAU shares all at once. But since the collateral for the loan is a cash deposit of $500,000, it seems clear they must maintain a cash balance of $500,000. Therefore, in order to pay the bills, they are going to have to a) sell more shares (and their most recent sales have been of the floorless convertible nature) and/or b) sell their MGAU shares.
Sure wouldn't want to be holding MGAU right now. |
