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RAW23
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Posted - 2011.08.10 11:00:00 -
[1]
Confirming collateral received. In the event of default I will pay out 1.3bil isk to the investor(s).
This is a cash guarantee and not subject to sale of the collateral.
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RAW23
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Posted - 2011.08.10 11:23:00 -
[2]
Edited by: RAW23 on 10/08/2011 11:24:27
Originally by: Atima Edited by: Atima on 10/08/2011 11:19:22 I'm questioning the validity of the bond as I suspect that he may struggle to make a 5% return which in turn makes this bond a loss making activity for him.
Of the c. 10bil involved only 700mil is at 5% and 1.3bil at 3%. The other 8bil does not come with a cost so the total cost of the financing can be spread across the whole 10bil. One could argue that the last 700mil might not be worth raising given the marginal returns but this can be justified in terms of efficiency and simplicity - the lines will run more smoothly and require less maintenance with this extra isk injected than they would if they were running with less isk than is needed for the whole operation leading to inefficient stop-starting.
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RAW23
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Posted - 2011.08.10 11:33:00 -
[3]
Originally by: Tekota
Incidentally I just want to clarify that the collateral is in the form of BPOs and not pure isk - don't want to be accused of that sort of sillyness.
Confirming this. By 'cash guarantee' I meant that in the event of default I will pay out cash for the full 1.3bil immediately and keep the prints rather than raise the repayment isk by selling the prints and pay out the investors later once this has been done.
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RAW23
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Posted - 2011.08.10 11:37:00 -
[4]
On the roi question, the relevant figure for me is always total cost of BPOs plus 3-4 times the mats costs for the finished product (1 x final build, 1 x comp build, 1 x mats buy orders, 1 x finished products on sell orders, although the last two can be combined if you are efficient enough). This gives you the total cost of running the production line, against which you set the profit per unit x how ever many units will be sold per month, expressed as a percentage of the first figure.
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RAW23
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Posted - 2011.08.10 13:09:00 -
[5]
Originally by: Atima
Originally by: Lauren Hellfury Ah gotcha. I knew I was being dense in some way. So it's about the overall return that you receive for the isk that you have tied up in it rather than being to do with the return offered to investors compared with the isk created as profit.
Today will not be a complete waste as I have learnt stuffs.
Yep he has tied up 8bn of his own isk which he will use to make a profit that will barely cover this 2bn bond. in return for this minimal profit he will make he is tieing up his buildslots and alot of his time - time which I think he underestimates.
It has been atleast 1 year since I updated my capital construction spreadsheets but I was making 4-8% on building carriers with a highly efficient BPO collection - It was over 50bn in BPOs just to make it possible. Freighters were even less profitable. I suspect the margins have become even worse since then however that is just speculation on my behalf
I think you're overstating the issues here. The interest on the bond will only be something like 75mil per month so there is little question of the bond sucking in all his profits from the 10bil+ total. My understanding is that returns are in the realm of 4% per month (and I think BSAC was aiming for 5% in their freighter construction IPO). If the whole things was being financed at a cost of 4% that would certainly be a problem but the vast majority of the isk is coming from his own pocket and he will see the returns from that (low as they are).
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