Wow! CEO of GMV owns about 60% of the company himself and now provides an unsecured loan of 3m to the company. Thats gotta be a bullish sign!
Juan Mack: Looks like it cam
Francesca Briggs: At 10% interest on short term debt that he controls 60% of the business is a con. He controls the funds so it technically is secured debt and the return he is getting for the loan is above anything on market so that to me would breach all regulations
Juliette King: Are you saying to me there are places you can secure loans these days?
Francesca Briggs: Virtually all loans are secured unless they state specifically otherwise. There are many debt avenues a business has available to them
Laila Foster: You wouldnt risk 3m for 10% p.a. if you werent sure youd get it back. It would take 10 years to get his money back and the company could go bust in 1 or 2 years. Obviously being CEO means he knows something about the future of the company.
Milo Daniel: When you say the interest return on the loan is above the market rates, you do realise lenders would baulk at the thought of loaning this company at normal market rates given its precarious cash position? Id be guessing 12-15% would be far more common. I have no idea how its arms length though!?
Francesca Briggs: Laila Foster: wrong he has a 60% ownership stake and is CEO he signs the invoices to pay the loan back so he will sign over his loan payment before he let the company go bankrupt. In effect he has a secured loan. At 10% return its a steal. It is onl…See more
Francesca Briggs: Milo Daniel: there are unsecured debt markets globally that have rates for these types of companies at BBSW +4%. On a 12 month loan he would even qualify for venture capital funding or even issuing shares or options, so he has many options but has chosen a poor one for the company but good one for him personally.
Milo Daniel: Francesca Briggs: Can you point to some recent examples for those sort of rates? For local companies with just over a quarter of cash left? This year alone Ive seen secured financing arrangements for CYQ at 16% and BDR with 6.75%+ 3 month LIBOR (for US$…See more
Francesca Briggs: Google the current unsecured debt rates. They are listed by all major banks. What everyone is forgetting Greece, Portugal etc. All the bankrupt countries can still finance debt at under 10%. Companies have access to the exact same markets. A company that is too small to fund share options, is eligible for venture capital funding. They have many options available but have not gone down that path.
Milo Daniel: In addition to the multiple examples I provided…even DFM financed a deal earlier this year…albeit across 3 years…with each year subsequently increasing from 9% to upwards of 13%. These are tangible examples, not comparisons with countries that ha…See more
Kayla Robinson: Youre right Francesca Briggs:. It doesnt sound such an honourable gesture to me. He cant lose!
Haley Gardner: This company had all promise but fail to deliver
Laila Foster: Google yacov geva the CEO. He has built many companies up from the ground and sold them off for multiples. He has done this sort of thing before and he is no fool.
William Patton: Looks like a 300,000 per year, unofficial pay rise
Laila Foster: Haha I could find better ways to invest 3m than getting 10% on some up and coming hopeful. He has bought close to 350k every 2 months over the past 6 months on market. He obviously thinks his company is undervalued and is putting his money where his mouth is. What more do you want from a CEO?
Giuliana Bass: Provided they get CFDA in the coming months – his track record with 48 FDA approvals is pretty impressive – hell have gone some way to avoiding dilution (naturally, protecting his own holdings too). I wouldnt mind ordering one of their products, which appear great in many facets, but the buying experience still seems a bit cumbersome. Interest at 10% is probably fair given the otherwise imminent nature of a CR – seen much worse at this end of the market. The curveball here is the fact that he is the boss, rather than just a substantial holder. Well see if ASX have anything to question.
Kali Lane: Cayman Islands, I dont think so?