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Stardust CEO
Stardust Manufacturing
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Posted - 2008.11.16 06:17:00 -
[1]
Background
I recently started a 4 week bond for 100m isk, and am about 3 days into it. I promised 5% return per week (20m total profit for investors). I got lucky and found a terrific deal, and made 45m profit... enough to cover the projected growth twice over.
The Situation
I began discussing the bond with a very good friend, and he says that the project is too small (as had been mentioned as a possibility in my bond thread). He talked me into setting up a hisec POS, and would like to join me in this venture (and future ventures).
The Problem
I have no idea if it's fair or acceptable to investors to allow someone else to be involved when I specifically stated in my bond introduction that it was just going to be me. Would an audit of the new player suffice? Should I ask my investors individually? Is there some kind of common procedure for dealing with changes made mid-project?
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Ricdics
Tleilex Developments
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Posted - 2008.11.16 06:30:00 -
[2]
Just put through a shareholder vote.
Make sure the new investor pays the same amount for a share and if the first vote goes through create another vote to increase the number of shares to accomodate your friend. |
Stardust CEO
Stardust Manufacturing
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Posted - 2008.11.16 06:38:00 -
[3]
I'm not sure if I'm misunderstanding you, or you've misunderstood me. He doesn't want to buy shares and be an investor, he wants to help me run the bond and generate profit.
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Kazzac Elentria
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Posted - 2008.11.16 06:55:00 -
[4]
Ricdic is still correct. It should be presented as a shareholder vote.
Generally speaking, update your bond thread with the proposed changes. He is also correct in that your new investor (even if he is a private third party) should pay the same amount per share that the rest of your investors have.
Even if you don't actually raise the number of shares per se, any investment amount will want to be known up front because in essence you are devaluing each other share holders stake as you increase the total investment amount.
I know this seems trivial because of the 100m amount, but its no less important if its only 100m or 100b.
Also you should think about just expanding your offering after paying out divs. If the interest is there, a small expansion could easily pay for the investment in a high sec research station. |
Rho'varo
Minmatar
Diversified Operational Services
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Posted - 2008.11.16 06:56:00 -
[5]
If you've already met the needs of your first offering, and you want to try something substantially different and maybe bigger, perhaps you should just buy back the debt from your investors early (I assume they'd be happy to get their return so early) and start over?
Maybe your first public venture was indeed too small? Certainly the results you describe don't do much to establish any credibility for your trustworthiness, reliability, planning or business acumen†, so maybe a meatier offering will help?
(† To be clear, I'm not asserting that you lack these characteristics, just that such a small undertaking doesn't carry much weight toward establishing them.)
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Kazzac Elentria
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Posted - 2008.11.16 07:00:00 -
[6]
 Originally by: Rho'varo
If you've already met the needs of your first offering, and you want to try something substantially different and maybe bigger, perhaps you should just buy back the debt from your investors early (I assume they'd be happy to get their return so early) and start over?
And there is that option as well. Equally valid to take. |
Kitchie
Gallente
Kitchie's Logistics and Marketing Corp
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Posted - 2008.11.16 07:09:00 -
[7]
Setting up a hisec POS, presumably researching BPOs, is a very different business than the trading business that you launched your original IPO to finance.
Although not an investor in your original issue, I also think that you should pay off your investors and then launch a new issue. This would allow investors to reappraise your expanded business plan and also to introduce your new partner.
Generally it's not good for investors to buy into a particular business plan and then find it morph into something else during its tenur.
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Eefrit
Eve Financial Services
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Posted - 2008.11.16 07:49:00 -
[8]
Originally by: Ricdics
Just put through a shareholder vote.
Make sure the new investor pays the same amount for a share and if the first vote goes through create another vote to increase the number of shares to accomodate your friend.
Unless the original agreement specified that a vote could change the terms, it is essentially unethical to change them with a vote. A bond and a share are very different investment vehicles and you can't treat them the same way. Of course this assumes real life ethics as opposed to made up fantasy game ethics.
To the Op: If you have the Isk to pay out the initial investors (which you said you do), then you can pay them out their full investment amount that they would have received early and then do things however you like.
In future I would strongly recommend an agreement that allows changes to the plans subject to some condition - such as a 75% shareholder vote. That is 75% of the votes cast not of the shareholders as very often shareholders don't vote at all.
Good luck,
Eefrit |
CornerStoner
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Posted - 2008.11.16 07:56:00 -
[9]
In addition to what others have said there would be nothing wrong with taking this bond to term. Make payments as promised...then start a new thread stating your intentions for an expansion. Give the option for current investors to retain their shares with additional investment required. Those who dont want in can send the shares back to you and you can resell them to new investors.
Whatever you do it should be decided by your current investors. You dont want to renege on your original IPO. |
Stardust CEO
Stardust Manufacturing
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Posted - 2008.11.16 08:51:00 -
[10]
So it would be legitimate to just send out the four 5% dividends I promised (one per week, four weeks) early and start over?
I don't want to alienate anyone, this is simply my first time doing anything involving other people's isk, and, as it turns out, that changes things considerably. I like it, I find it interesting, and it gives me motivation to log on and do something aside from spin my ship in station. That being said, please forgive my noobishness.
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EBANK Ricdic
Eve-Tech Savings n Loans
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Posted - 2008.11.16 09:01:00 -
[11]
Why not just pay this month's 5% when due and reinvest your additional earnings into corporate growth until you can afford the POS. This means you are increasing the value of your own operation whilst your interest repayments to bond holders remains static. Basically you are strengthening the foundations of your operation without needing to gather more capital to do so.
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cosmoray
Cosmoray Construction
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Posted - 2008.11.16 14:30:00 -
[12]
Payout the bond early and start another business |
MilowFV
Echo Heavy Industries
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Posted - 2008.11.16 15:15:00 -
[13]
Why does taking on a partner have any baring on a bond anyway? I mean he raised ISK through a bond to run some part of his operation and he is liable for the bond no matter what happens anyway, so if he want to take on someone to help him run his business I don't see why he would need a vote.
I guess it doesn't hurt to do a vote, but adding member to a corp shouldn't be something a bondholder has a say in. Though I ve always wonder about how eve use IPO/Bond to describe stuff. Most the IPOs I see seem just like bond/loans with a diff name.
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cosmoray
Cosmoray Construction
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Posted - 2008.11.16 16:02:00 -
[14]
Originally by: MilowFV
Why does taking on a partner have any baring on a bond anyway? I mean he raised ISK through a bond to run some part of his operation and he is liable for the bond no matter what happens anyway, so if he want to take on someone to help him run his business I don't see why he would need a vote.
I guess it doesn't hurt to do a vote, but adding member to a corp shouldn't be something a bondholder has a say in. Though I ve always wonder about how eve use IPO/Bond to describe stuff. Most the IPOs I see seem just like bond/loans with a diff name.
Very good point!
A bond is just an agreement to pay a certain amount of interest and capital back.
Whatever you do should have no bearing on the bondholders as long as you pay them the agreed amounts.
If you want to start another business with/without a partner setup a business for that. The bond will always be seperate. |
Salpad
Caldari
Carebears with Attitude
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Posted - 2008.11.16 16:46:00 -
[15]
Originally by: Stardust CEO
So it would be legitimate to just send out the four 5% dividends I promised (one per week, four weeks) early and start over?
I don't want to alienate anyone, this is simply my first time doing anything involving other people's isk, and, as it turns out, that changes things considerably. I like it, I find it interesting, and it gives me motivation to log on and do something aside from spin my ship in station. That being said, please forgive my noobishness.
It is the simplest and most fair solution. Also, you won't alienate anyone. Especially if you give your original investors priority on the new investment, e.g. so that they get to buy your new shares or bonds before you invite othrs to invest.
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Tellathi
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Posted - 2008.11.16 17:04:00 -
[16]
Originally by: Salpad
Originally by: Stardust CEO
So it would be legitimate to just send out the four 5% dividends I promised (one per week, four weeks) early and start over?
I don't want to alienate anyone, this is simply my first time doing anything involving other people's isk, and, as it turns out, that changes things considerably. I like it, I find it interesting, and it gives me motivation to log on and do something aside from spin my ship in station. That being said, please forgive my noobishness.
It is the simplest and most fair solution. Also, you won't alienate anyone. Especially if you give your original investors priority on the new investment, e.g. so that they get to buy your new shares or bonds before you invite othrs to invest.
As an investor in the current bond offering, I would be quite happy to get my investment paid in full early. I would also be most eager in the possibility of priority on the new investment when it is put forth.
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Stardust CEO
Stardust Manufacturing
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Posted - 2008.11.16 18:15:00 -
[17]
Thank you all for your input. If I feel ready to step to something larger before my bond is complete, I will buy out my investors early, and they will have a 24 hour head start on purchasing shares in my next venture. You've all been more helpful than I imagined, and not a single flame. It's a different environment here than GD, that's for sure. |
TeeTee Lifeless
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Posted - 2008.11.16 20:13:00 -
[18]
good decision. |
Shar Tegral
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Posted - 2008.11.16 20:24:00 -
[19]
Originally by: Stardust CEO
You've all been more helpful than I imagined, and not a single flame. It's a different environment here than GD, that's for sure.
Your post was polite, intelligent, and pertinent to this forum. Next time drop one of those so that we can have something to flame dammit. Yeesh, new people and there non-flammable ways. (We only flame idiocy here... which might explain why some of us go quiet for a few days occasionally.) |
Tellathi
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Posted - 2008.11.16 20:41:00 -
[20]
Originally by: Stardust CEO
Thank you all for your input. If I feel ready to step to something larger before my bond is complete, I will buy out my investors early, and they will have a 24 hour head start on purchasing shares in my next venture. You've all been more helpful than I imagined, and not a single flame. It's a different environment here than GD, that's for sure.
I'm very pleased with your choice.
On a sidenote, a noobish question. How would a Corporate CEO normally go about buying out a bond or in general purchasing back shares? Can he force withdraw them from the shareholders, is handled like a request or does it require the shareholder to manually return the shares? I'm sorry if this is covered elsewhere. |
Banni Vinda
Minmatar
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Posted - 2008.11.17 16:14:00 -
[21]
Originally by: Tellathi
On a sidenote, a noobish question. How would a Corporate CEO normally go about buying out a bond or in general purchasing back shares? Can he force withdraw them from the shareholders, is handled like a request or does it require the shareholder to manually return the shares? I'm sorry if this is covered elsewhere.
There's a few ways to do it:
* You can issue a buyback via an exchange (EGSEX), posting a buy order for shares at the original price plus any final dividend. The downsides to this are:
- You might have to pay a fee to the exchange
- It relies on a shareholder (I use that term as you are presumably using the ingame share mechanics) to complete the sale at their end. If someone invested, and then is away from the game for a while, they wouldn't be around to take up the buyback offer. This is why I dislike this method.
- If at least one person doesn't take the buyback (you cannot force this), then the corp/shares would become worthless (due to outstanding shares beyond your control). You would have to start a new corp and issue new shares for a future offering.
* You can issue a 'final' dividend through the ingame mechanism equal to the buyback value plus any final payment. After this, the shares become essentially worthless, so you still have the same issue described above where you will have to start a new corp if you make a new offering. The plus side is that it needs no action from your customers. The ISK just appears in their wallets, whether they are active or not. For this reason, this would be my preferred option.
One option that some people have taken (such as Shar on his recent bond IIRC) is to track your bondholders through out of game means. This means you manually have to transfer dividend yourself to their wallets, but does mean that forced-buybacks are entirely under your control, and there are no ingame shares to deal with at all. This is useful for bonds where there are a smaller number of equal customers, otherwise the overhead of tracking everything can become too much. Also, if someone wishes to trade their shares with another player, it must be done through you. (I believe at least one of Block Ukx's offerings works like this).
(Incidentally, simplifying the management of bond offerings is one of the features we're working on for EBANK's forthcoming exchange system  ) |
Tellathi
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Posted - 2008.11.17 16:33:00 -
[22]
Thanks, that summed it all up nicely for me. |
Kazzac Elentria
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Posted - 2008.11.17 17:52:00 -
[23]
Originally by: Shar Tegral
Your post was polite, intelligent, and pertinent to this forum. Next time drop one of those so that we can have something to flame dammit. Yeesh, new people and there non-flammable ways.
(We only flame idiocy here... which might explain why some of us go quiet for a few days occasionally.)[/justify]
Or sometimes we just face palm so heard we get a concussion. |
Eskona Runningstar
Eve University
Ivy League
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Posted - 2008.11.17 22:31:00 -
[24]
If you issued a bond with a fixed interest rate, your investors dont have any say in what you do. You dont need shareholder votes to start something new or expand operations - a bond does not include voting rights, as investors in a bond dont take any risk apart from the credit default risk of yourself.
If you use the in-game share system to issue interest payments, it is just a way for you to pay the interest you promised so you avoid having to keep track externally and issue payments to individual investors.
To keep this bond seperate from your other endeavours (in case you are using the in-game share system to distribute interest payments), you should set up a new corp for whatever you are wanting to get into now. You then have the option of keeping the money from your current bond and staying on the interest schedule that was published when you offered the bond, or paying back early. From a business point of view, paying back early is a loss for you as you could work with the money to gain additional income for you until the maturity date of the bond is reached.
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