Style, you
either have it or you
don't. And if you have it, you have it
all the time.The Rogue to the Rescue
by Tux Toledo
Page
6
"That's
a hefty premium over the current price."
"Avalon Industries shareholders are basically a satisfied
group. His offer has to be very rich in order for them to
sell."
"Can he afford to pay that much?"
"He must be able to," Harry said. "Of course, it really comes
down to how much it's costing him to finance the deal. His
investment banker will charge him an arm and a leg in fees.
He'll have to subtract that from whatever profit he'll make.
The higher the fees the less he can profitably afford to pay for the
stock. We, I mean Caroline, can pay him off, buy the stock
back from him at a higher price than he paid for it - its called paying
greenmail - or let him make the offer. If the shareholders go
for it, and I think they will, he'll own the company and sell off the
assets, making a tidy profit at our expense."
"Yes, if the company is worth $90 a share broken up and he pays $74, he
makes $16 a share."
"Not quite. Like I said, you have to figure in the interest
expense on the junk bonds and those fees he's going to be charged by
his investment banker. Once you figure those in he's probably
paying about $86 a share."
"Still, on 2 million shares..."
"Yes, that's eight million dollars profit." Harry shook his
head. "Small change by Wall Street standards but not a bad
piece of change for a two-bit hustler like Halzbee."
© 2008 David Biagini