29-09-2023, 11:53 AM
(27-09-2023, 09:25 PM)Ben Wrote: But the big question we need to ask is, if Chairman Tan has no confident in the future of his company, will he risk his $7 million?
Hi Ben,
I thought if one has confidence in the future, the way to go would be "contributing equity" because the upside would be unlimited, at the expense of higher downside though. As debt is higher on the capital hierarchy than equity, it has better protection (and of course, at the expense of limited upside at 8.5% per annum).
Of course, another way to look at it - is that interest costs are tax deductible. Also, another consideration would be the PE fund Hildrics Capital that owns 17.6% of it - any sort of equity fund raising definitely requires their support. But one thing is quite clear - it seems like the cost of debt isn't getting cheap for companies in the O&G business?
The whole family (Tan's 3 children and brother) is entrenched in this business - taking home 2 million in salary in FY22. Surely they have confidence in it