BTW you talk about debt as a bad thing. Debt to continue business operations without driving growth in activity (for future earnings growth) is bad, much like raising equity for the same purpose.
Debt for growth is not a bad thing.
I refer back to FMG when they were completing their Pilbara mines. Essentially a startup (ie. no revenues) but with huge debt (from memory something like $14bn with a debt to equity ratio of about 400%). The iron ore price crashed and so did the share price, many were screaming from the roofs that they would go bust / too much debt etc. So there is little old mrposhman, buying when others were selling at about $2, now sitting pretty at over $12 paying nice dividends and almost being in a net cash position.
Debt raised for earnings growth is not a bad thing, and no different to equity raises to do the same thing. Its the perceived cost of both that determines the difference. In most cases, debt is always cheaper than equity if you have the ability to raise it.
- Forums
- ASX - By Stock
- IGE
- Ann: Amsterdam Milestone Achieved
Ann: Amsterdam Milestone Achieved, page-37
-
- There are more pages in this discussion • 165 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add IGE (ASX) to my watchlist
Currently unlisted public company.
The Watchlist
CCO
THE CALMER CO INTERNATIONAL LIMITED
Anthony Noble, CEO
Anthony Noble
CEO
SPONSORED BY The Market Online