To: Jorjenzak (2692 )
From: SCOOBEY-DO Wednesday, Jun 16 1999 11:39AM ET
Reply # of 2717
>>>I do not understand the dilution discussion Scoob posted about
only new shares getting diluted?? Unless they are a new class, more
shares means each share gets diluted some in value unless the value
of the company increases at the same time proportionately.<<<
This is the way I took that statement:
Before Stock proceeds After
Cash 0 6,200,000 6,200,000
Other Assets 3,000,000 3,000,000
Total Assets 3,000,000 6,200,000 9,200,000
Liabilities 4,000,000 4,000,000
Equity (1,000,000) 6,200,000 5,200,000
Liab&Equ. 3,000,000 6,200,000 9,200,000
After the stock sale, the net book value would be $5,200,000 divided
by the shares outstanding including the new 10,000,000. The net
book value would be positive. Before the stock sale, the current
shareholders held a negative net book value in BETT. IMO The
current shareholders gain NBV through the stock transaction, while
the new shareholders' holdings are diluted due to the current negative
equity in BETT.
Let me know what you think.
Scoobey
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