Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Thrustmaster (NASDAQ:TMSR) -- Ignore unavailable to you. Want to Upgrade?

To: Timothy Detjens who wrote (2144)	5/20/1999 11:42:00 AM
From: Pete Mason	Read Replies (1) \| Respond to of 2443

I've been slogging through the financials, and was looking at their debt lines. At Dec 31, 1998 we have "... $5,821 was outstanding under the facility and the Company was in compliance with all loan covenants. At December 31, 1998, the Company had $826 available to borrow on the operating line of credit." That at prime + 2%. At Mar 31 1999 we have "...In late 1998, the Company entered into a demand discretionary $16,000,000 line of credit. The Company has not utilized the line as expected, and there have been operational issues between the lender and the Company. The Company and the lender have agreed that the Company will replace the lender by July 31, 1999. Simultaneously, the Company and the lender have agreed to reduce the facility to $2,500,000 and reset advance rates to 45% of eligible receivables and 30% of eligible inventory (subject to an inventory sub-limit of $1,500,000). Borrowings are payable on demand and bear interest at a fluctuating rate equal to the prime rate plus 4%. The line of credit is collateralized by substantially all of the Company's assets. The line of credit is a "demand discretionary" credit facility and does not require the Company to maintain working capital and debt-to-equity ratios. At March 31, 1999, $3,089,000 was outstanding under the facility and the Company was in compliance with all loan covenants." This line of borrowing was secured by "substantially all of TMSR's assets." Here's my evil guess at what's happened: "The Company has not utilized the line as expected, and there have been operational issues between the lender and the Company" means that the Company has not drawn on this line of credit as expected and instead went and got money elseware (i.e., the $4M from the offshore financing) at the cost of shareholder dilution. So the bank got pissed off, sharply lowered the amount, and jacked up the cost to prime + 4. It says the line has been reduced to $2.5M, yet there is still $3.1M outstanding? How's that? In any case, TMSR lowered their debt here from $5.8M to $3.1M during the quarter if I'm reading this right, and get to pay prime + 4% on the $3.1 that's left. So they got $4M from the "special financing", and decide to use almost $3M of it to pay off bank debt?? That's kind of odd... it's also odd that the arrangement they got into in "late '98" is already screwed up by Q1 99. Hey, what if THIS is the situation instead: the bank says they're not comfortable with TMSR's financial condition, so they're going to jack up the rate and/or lower the amount of the credit line; that forces TMSR to do their wierd "special financing" deal because their line of credit with the bank is disappearing?? I like this explanation better. So I wonder which came first: the bank shrinking the line of credit, or the offshore financing? Which caused which?? Maybe I'll be a conspiracy theorist yet! -- Pete