Eratat Lifestyle

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11 years 4 months ago #14769 by greenrookie
Replied by greenrookie on topic Eratat Lifestyle
As far as I am concerned,I am sure

Principal amount to be repay does not include interests.

For 12.5% interest, it is not actually high, for a shadow finance kind of loan, 12% is normal. HIgh quality companies of certain size are also getting this kind of deal if they cannot get bank loans.12-18% about 2to3 times PBOC rate

30% is on the high side.

Just my view

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11 years 4 months ago #14770 by chinsoonyuen
Replied by chinsoonyuen on topic Eratat Lifestyle
alternatively, eratat should lend out their cash at 12.5%. better than selling shoes and fashion.

30% interest sound like loan shark!!

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11 years 4 months ago - 11 years 4 months ago #14771 by pine
Replied by pine on topic Eratat Lifestyle
I agree with Skeptic and others who estimate the effective interest rate to be around 30% (instead of 12.5% or 16.5%). However, I am not thinking that the company is in dire straits or desperate. Consider a few other factors:

1. This is not a last-minute deal. Due diligence by SHK started more than 1 year ago. It met with management and went to the trade shows, checked out the Eratat stores, etc.

see: www.nextinsight.net/index.php/forum/3-sg...-Lifestyle?start=600

2. The interest expense is tax deductible, which brings down the cost to Eratat.

3. The warrant exercise price is 25 cents and expiry is 2 years time. There must be good reasons for the optimism embedded in that warrant pricing. I don't think anyone set out with the notion it's an exercise in futility.
Last edit: 11 years 4 months ago by pine.

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11 years 4 months ago #14772 by Bestworld
Replied by Bestworld on topic Eratat Lifestyle
So If the bond get through and Eratat eventually not able to pay up....then SHK will end up owning 25.59% and become the biggest shareholder?

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11 years 4 months ago - 11 years 4 months ago #14773 by greenrookie
Replied by greenrookie on topic Eratat Lifestyle
As far as to my knowledge,

Bond default is serious, creditor can lay claim to assets, and in this case lin jian Chen shares. Given the market capitalation of Eratat is 60 million ( bloomberg figure), about 300 rmb, he can Lay claim to half of the company. But Lin jian Cheng dun have that much shares, so shk can further lay claim on the assets of te company.

But in reality, they will most prob allow a refinancing under new terms. In the case of a default, u can understand the impact on shares price, so what shk can recover from the shares is highly questionable. If the price is halved, shk can swallow the whole Eratat. But again, in the case of default, who wants it anyway. So the most prob thing to happen is refinancing at better rate but with many punishing ceavets for it to survive.

Good luck then to shareholders in that default event

My view only.
Last edit: 11 years 4 months ago by greenrookie.

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11 years 4 months ago #14774 by chinsoonyuen
Replied by chinsoonyuen on topic Eratat Lifestyle
Then it is no brainer to put the company in such a big risk when the current position is strong as a rock with so high cash pile.

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