it is not diluting equity to get more equity if the new equity is accretive.
In other words, if a new dollar comes in and adds $2 of value then its not dilutive.
If bankers come in and provide a $1, they are hedging. Hedging means if there is any upside they get it. Beneficially- if commodity prices plunge, CDU is protected. Hedging usually comes at a stiff premium though. Generally, if banks want something so do you.
(Qu: what do you do at a meeting with a banker when he suddenly turns around and jumps out the window? You jump through too. There is bound to be money at the end of it)
Or, the banks could take a view and a smaller position and get first dibs after costs, but higher interest rate. If there is a view that inflation is coming, then locking in a small amount of debt - oh lets say $80M, which is 30%, that would be plenty. But then it costs shiploads for the BFS - some say north of $10M for the privilege. Then there are the fees.
Assume $2 div, then it goes to $3 at 30% debt.
The gristly part though, is that the banker and his debt covenants are hanging around every Board meeting with a psuedo veto. Personally I think a small amount say 20% would be ok - something that could be readily got rid of if necessary.
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