Andrew, You expressed a thought about FAMH increasing its share price by 10 fold "while borrowing $12 million paid for by additional share dilution of over 40MM at current prices." (from your post #2686)
If that was all there was to it, I could see what you would be concerned about.
However, if the financing agreement has a "buy back" option (as I believe it does), FAMH could (depending on the details) get $12 Million by giving out 40MM restricted shares now.
Then 9 or 10 months from now, draw down another $12 Million (plus X% interest amount) and offer restricted shares at the "then current price" of say... $3.00 per share (that's only 4MM shares).
They then use the new $12 Million (plus interest) to pay off the original draw down and buy back the original 40MM shares.
In other words, pay the interest on the original $12 Million and trade out 4MM $3.00 shares for the original 40MM 30› shares.
Of course, the new 4MM shares would have a 1-year restriction from that time, so this process could be done all over again with future shares that could have a value of $8 or $12 or what ever.
This process would not have to just occur in 9 or 10 months. It could possibly be done even monthly, if necessary, and reduce the 40MM shares to 35MM, then 30MM, etc, until they have just 4MM restricted shares (or even less) committed to this funding.
The key thing that makes this work favorably is for the FAMH shares to continue to increase as time goes on.
The banks concern is getting their interest on their loan and having collateral adequate to keep themselves covered.
This, of course, brings us back to my belief that the bank must like what they see in FAMH.
Just my opinions.
Best wishes,
Brad |
