In interesting legal dilema for SPF
SPF annouced that they are raising more cash than many expected they needed. In previous posts, I stated they needed at least $500 million. The number that was announced was right about there.
The problem is that in order for the deal to go through, SPF's shareholders must agree to allowing the fund to convert $128 million of its debt about 90 million shares(currently SPF has less than 70 million shares outstanding).
At the most, the fund would be paying less than $1.50 per share and if the fund purchased the debt at a discount, than the fund could effectively be getting the shares for less than $1.00 per share.
SPF existing shareholders are NOT being extended this opportunity. If SPF's existing shareholders want to acquire shares, they must pay $3.05.
Now here comes SPF's legal quagmire....if in fact SPF needs over $500 million due to its dire financial condition, was SPF's management being honest with shareholders in recent legal filings and public presentations about the company's liquidity and capital needs?
So which is it, does SPF really need the $500 million to remain solvent and that is why such a negatively dilutive deal to current shareholders was struck ....or was management's presentation of the company's financial condition and outlook fair and accurate in its recent legal filings and public presentations?
Only time will tell.