Converting Loans into Shares

A number of posts, including one from Ben, refer to the Wynn Jones' converting their loans into shares. I am no financial expert but consider the alternatives.

Loan period ends, even with the interest waived, the Club has to repay the loan. This money then becomes a debt of the Club and an instant "hit" on cashflow.

The alternative, the Club keeps the cash and issues shares (that have no value on any stockmarket) which may in the future be used in negotiations for a friendly takeover to get a justifiable return.

It may create a majority shareholder but as the number of shares held supposedly does not entitle the shareholder to more than one vote on Board decisions the only advantage to be gained is when the shareholder leaves the Board.

Pleaser correct me if I am wrong (I am sure you will)

Posted By: thirdager, Jul 11, 17:54:46