On Friday, June 27, 2003, at 07:01 PM, [EMAIL PROTECTED] wrote:
For instance, I'm very disappointed in this ridiculous platitude where they claim the shares are "worth 10% of the company" ... (ie they have a crystal ball -
They're not making a prediction, they are choosing a price at which they are willing to sell off 10% of the company. They're just asking a price, seeing if they can get it. Looks like they can, so far.
Incidentally, you're somewhat correct -- they might be asking a ridiculously low price of only 40,000 grams for 10% of the company. For example, do you think the principals would sell 100% of the company for 400,000 grams? I doubt it -- what's that, less than $5 million for the whole company? There is no way they would sell the remaining 90% at the same valuation as the first 10%.
Those shares represent 10% of the company BY DEFINITION. Not by valuation.
This round of share sales is going pretty well, wouldn't you say? And what happens if between now and 2007 the share price goes to 400 grams a piece? Do you think they'll sell the next 10% of the company for only 40,000 grams? Hell no, they'll offer the next 10% piece of the company for probably 160,000 grams. If they kept selling off 10% chunks of the company like that every four years, then after 36 more years who knows what the total price of the company would total up to? That last 10% could sell for -- sheesh I don't even want to guess!
I repeat: the shares being sold represent 10% of the company BY DEFINITION -- because TGC says so. How much that 10% sells for is a completely separate issue, and bears no relation whatsoever to what the remaining 90% "must" be worth.
-- Patrick
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