I have traded RMIX stock for years since it was $8-9 and I would trade a few thousand shares for a quarter point move. Now I trade 10,000 or 20,000 shares at a time for a nickel or dime move. Wasn't in it before earnings as I expected bad news. Currently own six figure investment in RMIX bonds which I have held for years. This is for full disclosure........IMVHO we will see one of 2 or 3 things happen and RMIX will survive. The predictions that I make are based on what I have seen in a dozen plus situations over the past few months, many of which I owned bonds of those copmpanies at that time. RMIX currently has $284 million in subordinated bonds outstanding. The easiest solution is to issue more bonds. You might say impossible in this market. Current bonds are going for just less than 70 cents on the dollar. They IMVHO are the best play on RMIX at present. Bond holders get paid 100% before equity holders get a cent in bankruptcy. However, as evidenced by SPF, HOV and BZH just to name three that have done it in past few months, RMIX can issue new debt that is either unsecured or secured at fairly decent rates, especially secured and if convertible. Either would jump ahead of current subordinated bonds in bankruptcy court and would have to be paid in full before subordinated even get a cent. There would indeed be a market.
Second solution would be to offer current subordinated bondholders majority control of RMIX by offering them stock in RMIX for their bonds. If they could convert $284 million debt to new equity, it would reduce debt by $284 and save the company $22.8 million in interest. To make this work, they would have to do a reverse split, probably 1 for 10. That would make a share of RMIX about $12.20+/- based on today's close and reduce outstanding shares from 37.33 million to about 3.73 million as fractional shares would be given cash. Bondholders could then be given say 80 shares for each bond. If all bonds were converted they would issue 19,840,000 new shares and have 23,570,000 shares outstanding at $12.20 a share. The $22.8 million in interest savings alone is just under a dollar per share in EPS pre-tax. RMIX would also immediately have a POSITIVE net worth (book value) of about $280 million.......while it currently has NEGATIVE book value of $5 million as of last quarter. Stock would probably jump like GGC did right after they did this. Shareholders complained on the GGC board for months while this was being negotiated and didn't like the 1 for 20 reverse split. When the deal happened, GGC stocks went from $5.25(GGC stock was down to a quarter before 1 for 20 reverse split) to over $30 in 2-3 days........
The third possibilty and less palatable is a reverse split and company issues new shares and uses proceeds to buy back debt at a 20-30% discount.
I do this for a living and you can bet RMIX management, though incompetent, will be smart enough to exercise one of these three strategies to avoid bankruptcy.......DaninFW