PSAgain without names.The proposed funding by way of...

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Al Dinga

135 Posts.

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01/02/24

14:02

Post #: 72185160
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Originally posted by Al Dinga: ↑

For the first time, yesterday (a good-news-Wednesday day) I had a post blocked!
I will try today to make the very grave point that was rejected yesterday.....today I will not name names but will stick to hypotheticals and see how we go.
Suppose you wished to invest in a company on the cusp of deriving income by way selling tonnage of their upcoming product. And suppose that company was in need of immediate finance.
You could offer to buy shares in the prospect at a discounted rate with a view to obtaining dividends or capital gain on sale of the shares. Or you could offer finance at interest with a view to receiving a hefty interest rate.
OR, you could offer your finance without seeking shares or interest receipts....instead, you would accept a royalty based on tonnage or sales in perpetuity.
From your view-point, you carry no risk other than that the tonnage may not eventuate or may not extend to the anticipated longevity...you would of course be aware of the costly detailed studies and approvals that would have already been completed.
From the hypothetical company's view-point, you would jump at the offer because it is non dilutive.
But then you would think about it and realise what a bonanza it would be for the investor making the offer and then you would conclude that the royalty payments impact the company's bottom line heaps more negatively and less open-ended than would interest or diluted dividends. So you would REJECT the concept of, and the specific offer of, non dilutive royalty funding because you have the interest of ALL shareholders at heart.
You would also, as a matter of prudence, look to the persons behind the offer of royalty funding to ensure that those persons &/or their affiliates are not of the forked-tongue variety who may stand to gain because of some insiders' knowledge of the company or, heaven forbid, may have some sway within the company's Board. You would reinforce to your present shareholders that you possess savvy diligence and the ability to act on evidence-based analysis without fear or favour to others who may be trying to hood-wink you from within.

What do others think?

Yours in concerned optimism...Al Dinga...cheers

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PS

Again without names.

The proposed funding by way of "non-dilutive royalty funding" has the hallmarks of the "Rainmaker" style of the bankers to HWIs.

Please tell me that the proposal is not being put to HFR by any "Rainmaker" bank that may be contracted to HFR.

If there is such an arrangement, then questions must be put to ensure we are not walking into a PWC situation.

Yours in questioning optimism.....Al Dinga...cheers

HFR Price at posting: 30.0¢ Sentiment: Buy Disclosure: Held
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Last 34.5¢		Change -0.010(2.82%)		Mkt cap ! $135.3M

Open	High	Low	Value	Volume
35.5¢	35.5¢	34.5¢	$18.36K	52.74K

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No.	Vol.	Price($)
4	99061	34.5¢

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Price($)	Vol.	No.
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No.	Vol.	Price($)
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4	69681	0.330
1	47036	0.325

Price($)	Vol.	No.
0.355	13265	3
0.360	5000	1
0.365	54690	1
0.380	20000	1
0.395	21000	1

Last trade - 14.32pm 03/06/2024 (20 minute delay)


Last 34.5¢		Change -0.010 ( 1.43 %)
Open	High	Low	Volume
35.0¢	35.0¢	34.5¢	43637
Last updated 15.36pm 03/06/2024 ?

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PSAgain without names.The proposed funding by way of...

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