Maybe a group of shareholders should get a syndicate together to offer a better proposal. If the Chairman gets 4.7 percent for 200,000 pounds (that is just over 42,000 pounds per 1 percent) , I might be happy to put in say 12,000 pounds to an alternative funding scheme for 0.25 percent (48,000 pounds per 1 percent).
The real issue with this proposal that the board must recognise is that there will alway be a cloud overhanging the company regarding the conflict. For example, as the repayment date looms, will the company look for alternative ways to raise capital in the event that there isn't sufficient funds to repay the loan? The IP may well be worth many millions more than the value of these loans. Prudent management looking after the interests of all shareholders would look to sell the IP or company for its market value in preference to having it called in as security under these loans.
Prudent management would also involve actively looking for alternative and more favourable funding options to repay these notes early and free the assets of the security going forward.
One thing I have never understood is that we don't seem to take deposits from customers for their orders. Some of the Customers are huge companies with big balance sheets and cashflows; surely there must be opportunities to have them provide some cash upfront. The other thing that is hard to comprehend is that with all those subsidies in germany the cost of units to the customer must be around 10,000 euro. That means that 1000 units would only cost a customer about 10,000,000 Euros. That really isn't a lot. And one final thing, the quarterly shows a cost of production of around 15,000 euro. Is that the cash cost or does it include some amortisation of the previous R&D spend and depreciation of plant and equipment? Let's be frank, we need to be pushing these units out the door to generate cash and reduce production costs. The only thing that matters is that we are cashflow positive. That is, generating enough cash to pay wages, raw material suppliers, interest, repay loans and other bills and fund expansion if needed. I really don't care if we make an accounting loss if the loss is related to non cash costs associated with plant and R&D etc paid for years ago.
CFU Price at posting:
4.5¢ Sentiment: None Disclosure: Held
