how does wayne do it?, page-100

RichardNixon

You know what BFS stands for I assume? It is an acronym.

If you pull it apart:
S for Study ...its a report on the goings-on. Then these are quantified over a range or parameters, some may even do Monte Carlo simulations (totally flawed, totally based on premise that I I make a gazillion wrong assumptions about statistical probability) it all comes out ion the wash.

Feasibility means - does this thing make money, if so, how much is spare. Attached to that are risk assessment (see study)

Bankable. How many times should I type the word "Bank" a 1000, a 1,000,000? At what point does the significance of this sink in?

I will return to this.

All the above is done by independent folk, paid for by the company. Not the banks. How creative and balanced are these independent folk? Paid for by the company..will the screw the reults in the companies favour? No, because there are gazillions of companies and only a few banks. Better to be a bit on the safe side than be viewed as dodgy when/if future reports turn up at the bank. You'll get a bad name and no banks will put any weight on it.

Subtle pressure exerted by the system. Now if one bank starts to get bad vibes, people meet and chat and bad news travels. "Catch you for coffee, have a chat" Later, "you guys know anything about XYZ, ABC, CDU,.."

So far none of this has anything to do with the central issue. Getting money backed by the presumed future revenue stream. It is simply one way to do it. Will any bank step outside what is established protocol, take a view? Banks don't take views.

Side bar: how did mobile phones ever occur? No market, no good doing consumer surveys, and hell we have plenty of phones now, and where will you get spectrum frequency space, and what??? you are going to put how many poles where? How many??? --what!! $4000 each!!! And GEEzus wept look at the size of that sucker.

In the above scenario they don't have a BFS, they have "The Business Plan" instead complete with educated guesses (=JORC), financial model,and risk analysis. The answer is Motorola did it all themselves, banked it themselves. Backed their own knowledge. Apple have consistently done the same.

Why? Because you can't explain the nuances to a banker in a 30 minute presentation. While there maybe some openness at the banks lower level, ultimately he goes to the credit committee, 6-8 cats on a hot tin roof rubbing rabbits feet. Nobody wants the distinction of being seen to support anything and taking the blame for a loos, not good amongst colleagues to question your judgement. Ultimately it comes down to bricks and mortar mentality.

Now, let me tell you about a unique deposit that has raw copper metal. "It has what? Never heard of it" yep they seem to have a lot of it "How many other ones exist?" None. "you mean none in Australia, right?" No, none in the world as best we can tell. "Any in the US or Sth America" Certainly not. "Sounds like an excellent first and last mover opportunity (wink). April first right?" errr... yes and err no. Opportunity and not April first.

Who runs this outfit. Hushed tones. WM. "What, the guy with two dicks? Get outta here! One more stunt like that and you are clearing your desk"

...and that is how its done. Everywhere and every time. The banks have 96% rock solid loans (or try to), 2% are in trouble, 2% are duds. The 2% are complete losses and they are serious issues for the bank, straight from unleveraged profit.

IF your face doesn't fit, nobody has heard of you you have no chance. It its a bit left field and a view is needed, forget it,. If its not guilt edged or backed by someon elese who has some street cred...forget it.

This is the journey to a bank.

So why do a BFS? Only if you need licks of money with a conventional business, gilt edged - to make sure its not headed to the 4% end of banking, that can be bench marked against others, with a face that fits or named people with bank connections "know you".

What do little guys do? Borrow from Mum and Dad, relatives and friends, mortgage the house. Try to get a cash flow up and running for a few years.

If they are unlucky, they get desperate and go to venture capital (Vulture Capital). If lucky they get a deal that leaves enough to crawl out the end.

CDU has gone to friends and relatives. Get over it.