I think some calculations here didn't take into account the quarterly interest payment. you cannot just take the difference between subscription amount and the par value.
So the interest rate is effectively higher than what you calculate.
I am not a accountant, so I might be wrong, but I understand d.o.g calculation than what some are calculating here.
Eratat really is a classic case study for physiological analysis. Those who see it as half full will be damming those who see it as half empty.
That Lin JianCheng put his fortune on this and rope in SHK are defintely plus points.
That the bonds interest are exorbitant is a fact, bond interest for other china's companies are also high, given the tightness in funds in china, banks are more willing to loan to SOEs, hence no surprise, that eratat need to pay such a rate. But the rate is high, that is a fact. I am not concern whether it makes more sense to take a loan, because i believe it might really be difficult to get a bank loan in china.
But can the growth, when it materialised more than offset the increase in financial costs?
Why not draw down some of the cash first? the amount raise is a fraction of the cash eratat has? why the urgency?
GEO wrote: Shouldn't eratat consider rights issue or placement rather than pay such a deal
At 13.5 c, too cheap to do any rights issue or placement... shareholders will complain abt the dilution at such a cheap price.
If eratat really wan the funds from the warrant badly,, something will surely be done to push it up. Else why go through this trouble to hv bond cum warrant... as every new fund raising exercise is very costly to do.
Also provided the global market sentiment remains good till the maturity date.
NextInsight
a hub for serious investors
