Basically, I don't like the bond issue that much either, as the interest is quite harsh at 30%. Much of my concerns have already been voiced by other forummers here.
However, one additional point I would like to add on is, if SHK truly believes Eratat is a risky company that requires a high interest rate, why is the charge to secure the bond so little?
121,525,000 shares x 0.135 x 5 = RMB ~82m
This is only 60% of the bond principal of RMB 134m.
As we all know here, Eratat is a much neglected stock. Thus, I wonder if it is possible that this is simply a transaction to gain SHK's stamp of approval so Eratat's shares can gain greater prominence among the investor community. (ie. SHK lends its name to Eratat, and in return, this deal will allow SHK to participate in any potential upside) Especially given the RMB 500m on balance sheet (Eratat clearly doesn't need the loan) and the short maturity of the bond issue.
I don't know how prestigious SHK is so I can't be sure how viable this theory is. How valuable is this "stamp of approval"? Can this "stamp of approval" truly raise Eratat's profile significantly, such that Eratat will be willing to pay a premium for it?
Any forummers who can shed light on this, please do. Thanks!
You are in denial. Now you're telling me that 100.9 million + 134 million adds up to 200.8 million? Or are you trying to say expenses for the warrant and bond issue was a ridiculous 33.2 million?
The subscription price refers to the amount paid to subscribe to this bond cum warrant offer. This is pretty clear to most around here and even your fellow investor Tactician has admitted as much (refer to his earlier post).
Anyway it's getting late and I'm tired and going to bed. You can discuss this with others around here and have them explain to you. Hope you wake up from your denial by tomorrow.
You are in denial. Now you're telling me that 100.9 million + 134 million adds up to 200.8 million? Or are you trying to say expenses for the warrant and bond issue was a ridiculous 33.2 million?
The subscription price refers to the amount paid to subscribe to this bond cum warrant offer. This is pretty clear to most around here and even your fellow investor Tactician has admitted as much (refer to his earlier post).
Anyway it's getting late and I'm tired and going to bed. You can discuss this with others around here and have them explain to you. Hope you wake up from your denial by tomorrow.
Good night to you.
Chill guys.
Skeptic is correct. Eratat is only raising RMB100.5m as of now. They MAY raise an additional RMB100.9m in the future if the warrants are exercised when share price goes above $0.25. It's quite clear in the announcement from "use of net proceeds" (RMB 6.5m for sales and marketing office, RMB 33.5m for flagship-owned shops, RMB 60.5m for working capital)
then there's expenses also to be incurred in paperwork as well as marketing cost for the bond etc.
plus the RMB 100.9 million, the total proceeds do work out to be over RMB200 mil.
what is the main point u arguing about, skeptic?
Skeptic wrote: Newbiestock,
You are in denial. Now you're telling me that 100.9 million + 134 million adds up to 200.8 million? Or are you trying to say expenses for the warrant and bond issue was a ridiculous 33.2 million?
The subscription price refers to the amount paid to subscribe to this bond cum warrant offer. This is pretty clear to most around here and even your fellow investor Tactician has admitted as much (refer to his earlier post).
Anyway it's getting late and I'm tired and going to bed. You can discuss this with others around here and have them explain to you. Hope you wake up from your denial by tomorrow.
Skeptic is correct. Eratat is only raising RMB100.5m as of now. They MAY raise an additional RMB100.9m in the future if the warrants are exercised when share price goes above $0.25. It's quite clear in the announcement from "use of net proceeds" (RMB 6.5m for sales and marketing office, RMB 33.5m for flagship-owned shops, RMB 60.5m for working capital)
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