On Tuesday, July 1, 2003, at 05:43 AM, Danny Van den Berghe wrote:
Ah, an ipo that's going to be used to keep paying high dividends to themselves. That's a good one.
That's an inaccurate characterization of my point. I am saying that it is quite possible that they might already be earning high dividends straight out of profits, IPO or not.
You objected that if they have enough profits to pay dividends to the primary owners, then why would they issue a 40 kg IPO?
But there is nothing especially strange about this. There are many reasons, including PR, introducing a sensational new market concept, etc. But when all is said and done, they have 40 kg of capital to work with that they would not have had otherwise.
To raise that same 40 kg by asking the primary owners to forgo dividends for 1.33 years (for example) seems unnecessarily harsh, plus they'd have to wait the 1.33 years, plus they wouldn't have a chance to introduce the sensational Dbourse and allow the public to have a literal interest in TGC.
So the two alternatives are (1) Forgo our dividends for 1.33 years, eating bread and water, thus saving up 40 kg of capital in the dullest possible way, or (2) Keep reaping the profits exactly as we've been doing (minus 2880 grams), raise 40 kg of capital fairly quickly, and create a market sensation.
Is it any wonder they went with alternative (2)?
-- Patrick
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