Cline Mining used to trade over $1.00 four or five months ago.Now it is trading about$.10 a share.This is bad but a few weeks ago it was trading at $.05 a share.It's prospects are slightly better.Cline was unable to pay an interest payment of $2,500,000.For awhile their new Elk mine was the only producing mine but now it too is under temporary suspension.Cline needs about $35,000,000 to pay off it's debts.
Cline has lined up financing from a company called Marret.The Marret plan will have a rights offering of $35 million and a conversion of debt into common shares of $25 miilion.Cline has now a second offer by a group;this plan is called the Cline Transaction.It will give Cline $35 million in cash to pay off Marret.The Cline Transaction will acquire 50%of their securities or require the sale of assets.The Marret plan will be implemented if Cline does not have a binding agreement.
At this point the Marret plan seems cheaper because it will give Cline time to achieve higher commodity prices for it's chief product -coal.However a right's offering now would be expensive and would dilute their existing shares.But the trick for Cline is not ot convert to common shares but into a senior secured lien.Over time Cline could try to get cheaper long term debt because in the final analysis every dollar saver on interest goes right into earnings.
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