The debenture can be valued as sum of two parts – fresh equity and an income stream.
The interest payment on the debenture is $5.4 mm per annum. The net present value of the interest payments are $22.7 mm using 6% discount rate. In other words, if the debenture investor wants to earn a 6% yield, the income stream is worth $22.7 mm.
$86.25 - $22.7 = $63.5 value of the fresh equity.
So, the income stream is worth $22.7 mm and the fresh equity is worth $63.5 mm
$63.5 mm for 14.8% of LSG implies the total mkt cap should be about $428 mm. LSG has 444.3 mm shares plus the 61.6 mm new shares from the debenture = 505.9 mm shs. Current mkt cap of $428 mm divided by 505.9 mm shs = $.85 cents per share
Or you could simply say – they diluted shareholders 14.8% so the stock should drop 14.8% which would get you to about (1 - .148) x 1.13 = $.96 . . . but this doesn't take into account the reduction to cash flow due to the additional $5.6 mm in annual interest expense
NOTE: If the debenture investor desires a 10% yield, then LSG is worth $.88 per share.
But, Makuch had said on the 1Q call that he might raise funds in 2H, so some of this might already be priced in.
Just my thoughts and some rough numbers