Ann: Notice of General Meeting & Letter to Shareholders, page-29

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mondyinvest

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22/03/24

12:13

Post #: 73011850
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Originally posted by Deme: ↑

Excellent post (as always, mate).

Just a brief comment re: "The risk is that JP & co feel forced to go ahead on a funding deal with a potentially punitive interest rate/term".

Directors have a fiduciary duty to make decisions in the best interests of shareholders. This includes not concluding any deals deemed commercially unsatisfactory or which put the long-term interests of the company at stake.

While capital markets are still tight and while I agree with your interest rate range of 12.5%-15% - there would be limit above which JP and Co would need to walk away in the interests of shareholders.

The notion that a punitive deal is better than no deal is simplistic (not saying you are personally implying this) and not how it works - given a directors fiduciary duty. I've seen companies suspend trading rather than accept commercially unsatisfactory debt deals.

I am confident that JP won't be forced into any company threatening deals - while also agreeing that any debt secured won't come cheaply.

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Completely agree. You’ve exactly captured my sentiment. That’s precisely the ‘risk’ I’m referring to - that directors feel they need to press ahead with debt-to-develop rather than walk away from a (potentially) punitive deal. Fiduciary duties notwithstanding, there have been plenty of occasions where management teams have pressed ahead with a decision even though it’s highly unlikely to be accretive for shareholders. South32 pushing ahead with the development of Taylor/Hermosa is a recent glaring example of this.

GLN Price at posting: 40.5¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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