Karoon Coming Milestones, page-19

Nearly all businesses maintain debt instruments... In my own business life I found that once I paid out everything and had cash in the bank, life was very easy, but then I found that I wasn't really growing anymore. Whilst an enviable position, I was standing still which in real terms is going backwards..So, when I had had enough of the comfortable debt free life, I went out and borrowed large again and created the most successful enterprise of my working life. Debt and the management of debt is what drives the business and enables growth... So I have no problem with running debt as long as it is maintained within practicable levels and used principally for growth.

"but if you can run a business by paying out dividends instead of paying down debt,you’re a better man than I because I would call that bonkers"

The obvious answer to your statement/claim is...... why not do both?... it is necessary to service ALL areas of the business.... annual budgets determine the distribution of funds and provide the means for the board's first class travel and post AGM long lunches.....hardly essential, but necessary for ego and status...but I would argue shareholders are an equally essential part of the business and need as much attention as servicing debt, maintaining the FPSO, paying the board's largesse or growing the business. Shareholders are the owners of the business after all, but are the first (and only) ones to miss out when times are tough. ie the first twenty years of KAR business.

The board never misses out, but uses our money to promote their own gains.

Empire building is not an essential element to running a successful business on behalf of shareholders.

A competent board could service shareholders and grow the business at the same time.