FAMH - FIRAMADA Staffing Services Message Board

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Microcap & Penny Stocks : FAMH - FIRAMADA Staffing Services

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To: Andrew H who wrote (2176)	1/29/1998 10:23:00 AM
From: Brad	Read Replies (1) of 27968

Hi Andrew! The company said the line of credit is based on a drawdown against trading volume. So the bank's exposure to risk is based on the success of the stock. If the price of the stock goes up, the risk is lower to the bank, so the amount of money FAMH could use would be greater. On the other hand, if the stock goes down, the liquidity is tougher so the available credit for that time period is reduced. Essentially, the risk to the bank is tied directly to the company's stock performance. To me, this seems to be a very reasonable situation. If the company does well, they have $$$ readily available to them. If the company does NOT do well, the credit becomes limited. The banks initial risk is probably determined by the stock performance over the past month or so and is probably based on the stock price at the time of the drawdown (since, IMO, that's the only way you could determine the amount of credit allowed at that time). However, the bank must feel confident enough in the future of FAMH that they are accepting shares that are restricted for a year! That's good news to me. That's MY take on it anyway. Best wishes, Brad

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