MRU In the Balance (Update 4)?

Stock rose 3 cents today, from $0.07 to $0.10, a 43% move.  OK, I know the stock is thinly traded (just over 90,000 shares changed hands today), so all it would have taken was one aggressive buyer to move it up. 

MRU has issued a series of SEC filings throughout the week:

• Monday, November 10th 10-Q filing indicated that a bankruptcy filing was imminent unless additional equity was raised or the company could secure a waiver from their senior debtholders.
  
  • "Unless the Company is able to raise additional equity capital, it will not be possible to be in compliance with the amended covenants after November 10, 2008, as the amount of cash needed to reduce payables if paid out would cause the Company to violate the minimum unrestricted cash covenant.  In this event, unless the Company were able to secure an additional waiver and amendment from the holders of the Senior Secured Notes, an event of default will occur with respect to the Senior Secured Notes, and if the holders of the Senior Secured Notes chose to accelerate their debt the Company would need to file for bankruptcy."

• The Wednesday, November 12th 8-K filing provided an extension of the deadlines to November 12th (there was a two day lag between the date of the report, November 10th and its filing date of November 12th):
  
  • "On November 10, 2008, the Company and the Buyer agreed to extend the November 10 deadlines until November 12, 2008, subject to all the other terms and conditions set forth in the Senior Secured Notes Amendment.

• The Thursday, November 13th 8-K filing continues the theme of extensions:
  • "On November 12, 2008, the Company and the Buyer agreed to extend the November 12 deadlines until November 13, 2008, subject to all the other terms and conditions set forth in the Senior Secured Notes Amendment."

• The Friday, November 14th 8-K filing brings back memories of that classic Bill Murray movie Groundhog Day (yes, you guessed it, another extension):
  • "On November 13, 2008, the Company and the Buyer agreed to extend the November 13 deadlines until November 14, 2008, subject to all the other terms and conditions set forth in the Senior Secured Notes Amendment."

So, either MRU is days (or even hours) away from securing that equity financing and avoiding a covenant violation which is why the Senior Note holders are willing to provide daily extensions or....

I went to the website tonight and clicked on their Investors link and got the dreaded error message "The page cannot be found."  Keep an eye out for the continuing saga being played out through the 8-Ks. 

Update (November 17, 2008):  8-K filed today indicated that their Secured Note Waiver Extension has been extended until today: 

• "On November 15, 2008, the Company and the Buyer agreed to extend the November 14 deadlines until November 17, 2008, subject to all the other terms and conditions set forth in the Senior Secured Notes Amendment."

The drama continues.....

Update (November 18, 2008):  Yes, you guessed it, another 8-K and another extension.  Here is the exact wording:

• "On November 17, 2008, the Company and the Buyer agreed to extend the November 17 deadlines until November 18, 2008, subject to all the other terms and conditions set forth in the Senior Secured Notes Amendment."
• Meanwhile, their stock price is getting pummeled today on extremely strong volume.  At 1:08pm, the stock was trading at $0.04, down 53% from their opening price of $0.09 on volume 10X the normal average of 41,000.  I don't pretend to know how penny stocks trade, nor do I know what this specific activity means in terms of likely outcomes.  If they raise the $250 million, then the current common stock holders will be severely diluted and if they don't raise the capital then they will also suffer a similar fate.

Stay tuned....

Update (November 19, 2008):  Another extension in 8-K disclosed, which goes through the end of the day today: 

• "On November 18, 2008, the Company and the Buyer agreed to extend the November 18 deadlines until November 19, 2008, subject to all the other terms and conditions set forth in the Senior Secured Notes Amendment."

Update (November 20, 2008):  New Amendment to the Agreement has been posted in an 8-K filed on Friday, November 21st.  Here are the contents, which provides the company with breathing room to meet certain covenants until January 8 or January 31, 2009: 

On November 20, 2008, the Company entered into a Third Amendment agreement (the "Third Amendment") with respect to the Senior Secured Notes. The Third Amendment was made by and among the Company, the Subsidiaries, the Buyer and Viking. Among other things, the Third Amendment amends certain provisions of the Purchase Agreement including the covenant with respect to the amount of the Company's indebtedness as it relates to payables. The covenant has been amended to require payables not to exceed $12,000,000 on or prior to January 8, 2009 and $5,000,000 after January 8, 2009. In addition, the Third Amendment provides that the January 8, 2009 date on which the payables limit decreases to $5,000,000 will instead be extended to January 31, 2009 if on or prior to January 8, 2009 (and thereafter) certain conditions are satisfied. These conditions are that on or before January 8, 2009 (i) the Company shall have entered into definitive documentation to sell assets or raise debt or equity funds in an amount no less than the greater of $50,000,000 and the amount reasonably necessary for the Company to operate its then existing business on a positive net income basis and to satisfy the Company's debt and financial obligations including its obligations under the Senior Secured Notes, (ii) the Company shall have placed $11,200,000 in a segregated bank account for the benefit of holders of the Senior Secured Notes as security for the Senior Secured Notes until they are repaid in full, and (iii) the Company and the Subsidiaries have since November 20, 2008 been in compliance with the transaction documents entered into in connection with the Senior Secured Notes and during such time there has been no default under the Senior Secured Notes. Moreover, pursuant to the Third Amendment, the Company and its Subsidiaries have agreed to maintain unrestricted and unencumbered cash on hand in an aggregate amount of not less than $4,350,000, and Embark has agreed to maintain unrestricted and unencumbered cash on hand of not less than $1,500,000.

In connection with the Third Amendment, the subsidiaries described below granted certain security interests for the benefit of the holders of the Senior Secured Notes in support of certain guaranties of the Senior Secured Notes provided by the subsidiaries at the time the Senior Secured Notes were first issued. The security interests were granted pursuant to the Pledge Agreement and the Security Agreement (as well as the Trademark Security Agreement and the Copyright Security Agreement) described below.

On November 20, 2008, Goto College and Viking entered into a Pledge Agreement (the "Pledge Agreement") whereby Goto College agreed to pledge to Viking for the benefit of the holders of the Senior Secured Notes all of the capital stock and other equity interests and security of Embark and Embark Online now or hereafter owned or acquired by Goto College.

On November 20, 2008, the Subsidiaries and Viking entered into a Security Agreement (the "Security Agreement") whereby, among other things, each Subsidiary agreed to pledge and grant a security interest to Viking for the benefit of the holders of the Senior Secured Notes in substantially all of their assets except with respect to the bank deposit accounts of Embark and Embark Online which are not included in the grant and no security interest was provided in such bank deposit accounts.

Comments

[Jim]

that link you mention has been broekn for some time... this one still works from the holding co. website...but I'd agree with your assessment by early next wk we should know about fate of MRU.. lots of things hang in balance...

http://www.mruholdings.com/Default.aspx?Module=Investors