The trouble with debt, is that eventually it comes due. Nabis Holdings (CSE: NAB) shareholders are waking up to that reality this morning, with the announcement that the company is to undergo a recapitalization transaction as a result of its outstanding $35.0 million in debentures that are in default. The transaction will see shareholders entirely wiped out and left with nothing.
The recapitalization transaction will see Nabis file a proposal under the Bankruptcy and Insolvency Act of Canada within the Ontario Superior Court of Justice. Under the proposal, the debentures will be recapitalization with a number of material terms attached.
Most importantly for shareholders, is that the transaction involves, “the cancellation of all of the common shares, preferred shares, warrants, stock options and any other similar equity-type securities in the capital of the Company (collectively, “Equity Claims”).” Under the transaction, all equity claims are to be “irrevocably and finally extinguished upon implementation of the Proposal.”
The recapitalization will then see 3,700,000 new common shares of the company issued to the creditors of the company on a pro-rata basis, along with new 5.3% first lien notes for $23 million in aggregate. The new notes will be due in 2022.
The recapitalization transaction will be voted upon at a meeting of the creditors that is to be held December 14, 2020. The company has agreed to certain covenants and restrictions on its business until the implementation of the proposal.
The transaction is being pursued following the failure of the company to make interest payments on the debentures that were due on June 30,2020 as well as September 30, 2020. Legal action was pursued against the company by Odyssey Trust following the breach of the terms set out in the debenture agreement. A special committee from Nabis’ board was then assembled in August to find strategic alternatives with the debt holders. That review resulted in the proposed recapitalization transaction, which is viewed as the best alternative for stakeholders.
Nabis Holdings last traded at $0.005 on the CSE.
Information for this briefing was found via Sedar and Nabis Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.