Why is this interesting, and is it clear what the REAL interest...

Why is this interesting, and is it clear what the REAL interest rate is?

Here is an example of a few things you need to look out for, when reading a funding announcements from a company.

As an example of describing funding, you will notice that Pantoro declared new financing today.

The way they explain it will give you an indication of the murky "devils-in- the-details" interest rates that companies are not overly keen on disclosing.

Firstly, they initially state the loan is at 6.8% per annum for the "combined interest margin".
Following that, they state the loan is at 7% "net of the OID (Original Issue Discount)".
Following that, they state the loan balance is at 8% plus the "SOFR (Secured Overnight Financing Rate)".

As you can clearly see, this gives investors no clear idea on what the actual rate is, it's as clear as mud, and to most investors it's just a load of gobbledygook.

So then you need to read the small print in the document.

It then says the loan rate is at 8% plus an SOFR Minimum Floor (MF) of 3.5%, which can be much higher if the SOFR is higher overnight, but it cannot be less.

So, we are finally led to something near the truth.

So the truth is, as far as I can determine, that the company's REAL loan facility is at a Minimum of 11.5%, but higher if the SOFR goes higher, but the company's first line of the announcement declares an interest rate of 6.8% for a combined interest rate.

So many shareholders and investors, particularly the young and naive ones, may think the loan's interest rates is good at 6.8%, but in reality it is actually at a Minimum of 11.5%, so they are being fooled, either deliberately, or by thinking that is too muddy and complex.

This is the type of "fast one" that some companies try and pull when reporting loan interest rate agreements.

This is why you need to read the financing documents very closely in order to find the real truth.

This forum doesn't get much traffic, so it's not going to matter much to people who are investing here, or reading this, but nevertheless, I thought this announcement interest, and worthy of analysis.

Gw