Golden Minerals Co. (NYSEMKT: AUMN) no longer carries debt on its books after Sentient Group agreed to convert the rest of its convertible notes into the company’s common stock. The debt-to-equity conversion also saves AUMN some borrowing obligations that would have complicated its liquidity position.
Sentient converted debt and accumulated credit amounting to $1.16 million to AUMN’s common stock. The debt was converted at the rate of 90% of the stock’s 15-day price average immediately before the actual conversion transaction. As such, Sentient gained more than 4 million shares in AUMN.
With that, Sentient now owns about 88.9 million shares in Golden Minerals Co. (NYSEMKT:AUMN), giving it a stake of 46.8% in the company. Sentient earlier converted about $3.9 million loan plus accumulated interest to AUMN common stock.
If Sentient didn’t convert the remaining debt and accumulated interest to equity, Golden Minerals Co. (NYSEMKT: AUMN) would have faced a complicated financial future. The company would have had to pay $1.2 million in principal and interest to Sentient in October this year if Sentient didn’t convert its remaining debt.
Need for additional cash
Although Golden Minerals Co. (NYSEMKT: AUMN) has removed debt from its balance sheet after Sentient agreed to convert its debt, cash crisis still looms. The management revealed in a previous release that the company will need to raise additional funds to keep all its activities running through 2017. The need for additional cash was foreseen even if Sentient converted its remaining debt.
To avoid the potential cash crisis, Golden Minerals Co. (NYSEMKT:AUMN) plans to issue either equity or debt or both to raise more cash. But if the additional fundraiser is not successful, the management warned that a reduction of 2016 budget will be inevitable.
Financials – Golden Minerals Co. (NYSEMKT: AUMN)
Golden Minerals Co. (NYSEMKT: AUMN) generated revenue of $1.5 million in 1Q2016, down from $2.3 million in the year-ago quarter. The company logged a net loss of $6.3 million, wider than a net loss of $3.4 million in the like quarter a year ago.
AUMN finished 1Q2016 with cash and equivalents amounting to $2.1 million, which is significantly lower than $4.1 million in the prior quarter.