The three-year chart of this company is self-explanatory:
If you ever wanted to own a huge stake in a soon-to-be delisted publicly traded company, now is your opportunity – put in a bid of a penny and see how many of the 14,971,799 shares outstanding you can capture before you have to take a zero!
Earlier this week, Fortress (TSX: FGE) announced:
VANCOUVER, Dec. 10, 2019 /CNW/ – Fortress Global Enterprises Inc. (“Fortress” or the “Company”) (TSX: FGE) (OTCQX: FTPLF) announces that it has failed to receive any indications of interest pursuant to its previously announced strategic and financing initiative (the “Strategic Initiative”) by the required deadline under the financing agreement (the “Financing Agreement”) entered into among the Company’s wholly owned subsidiaries, Fortress Specialty Cellulose Inc. and Fortress Bioenergy Ltd., and their secured lenders or their affiliates (together, the “Lenders”). Failure to meet a material deadline under the Strategic Initiative when required constitutes an event of default pursuant to the terms of the Financing Agreement.
With $208 million in debt outstanding (and this debt being accelerated due to covenant breaches), and the operations being cash negative due to the pulp industry, it does not look good at all.
$62 million of the debt consists of convertible debentures (TSX: FGE.DB.A), which are trading at 0.1/$1,000. Amateur investors don’t apparently realize that this amount trades with accrued interest – i.e. with the 9.75% coupon, a purchaser would pay virtually nothing for the convertible debt, but they have to send to the seller nearly 487bps in interest!
In CCAA, the recovery on the debentures are most likely to be zero.
That concludes today’s financial amusement.
(Update, December 15, 2019): Well, that didn’t last long. They went into CCAA on the evening of the 13th.
I’ve posted a chart of the debentures for historical reasons.
