@mosco5
Thanks for bringing that case study to our attention.
I was waiting for something like this to come out,
it's always a good idea to look at the UGLY side of a deal to really understand what we are getting into with a Bond Note.
And there is always an ugly side to any investment you make. Its good to be aware of it.
The fact is from what I've been researching is that the Bond Market is similar to the stock market, you can buy and sell bonds, for a profit or for a loss. Bond investing is just like stock investing - but maybe safer. And I am sure there must be a few unsavoury deals that Pareto's would have engaged with.
Don't forget folks the Bond WKT is going for is a High Yield Bond note.
The interest will be much higher than a normal loan, somewhere between 8% - 15% IMO, thats because WKT is still a major risk located in a third wold jurisdiction. WKT decided to go this way so it will not dilute shareholder value, I keep stressing this that WKT management are focused on increasing shareholder value. So while we take on higher interest, were not being diluted. It gives the company a good chance of doubling or tripling shareholder value.
The Lebara story is definitely a "Tale to behold" - but it ultimately comes down to the company not being able to keep up with payments and critical account submissions required as part of their terms. There is also a conspiracy of massive corruption in the mix with potential directors of the companies having personal affairs, amongst dodgy deals that were done after the Bond Note was issued. Pareto's look to have engaged several external organisations to perform the due diligence process, but the process is depended on the companies providing unfalsified information if I am not mistaken. As luck would have it, it looks like Lebara have managed to pull the wool over the foxes eyes here. Paretos are sure to hold the blame here to, as the buck stops with them, and they are not left off the hook by any means, I believe they were under scrutiny from the relevant authorities for such a deal.
Source: https://www.ft.com/content/2db0798c-8c3b-11e9-a24d-b42f641eca37
The Lebara deal was worth €350m a fair bit more than what WKT will be going for, but make no mistake that all the deliverables Paretos have outlined in their terms which is yet to be disclosed will need to be met. Everytime a bond note in devalued, Pareto's are not left off the hook they are scrutinised and their rating goes down. I believe their particular industry has come under more and more scrutiny in recent times forcing them to tighten up their game. As a result lending and borrowing has not been a walk in the park since 2017 - 18.
WKT has not been in the habit of dodging its accounts, and we are one of the few ASX listed companies that have board representation. Someone who is solidly invested in the company, who will be a preview to all its inner workings.
Another article says: "The shifting sentiment in the European junk market has been clearly seen in the primary market for new bond issues, with a record number of deals shelved in the first half of this year"
https://www.ft.com/content/cd15d7e2-8057-11e8-8e67-1e1a0846c475
If anything this should be building confidence that the route Paretos have taken this time around will be more bulletproof.
I say this because Ultimately - Pareto's do not get their cut if a deal is shelved,
- Investors won't take up the bond note if the due diligence is not spot-on
- Investors won't take up the note if %interest rates are not favourable
I personally can't wait to see the terms of the Bond note now, because that is really going to tell us how valuable our project is to the entire world. If the interest rate is anything under 15%, boy strap in.
AIMO, Get stuck into it guys DYOR on the Lebara deal, its good to be educated on all this.
The down ramper's or as I call them "Down Rapers" are here to educate us All.
(20min delay)