Here's our risk/reward defined. Rapid increase in revs through the smart use of the capital structure and incoming cash should achieve a much higher market cap, which in turn will help keep dilution reasonable moving forward.
10. Can you avoid using convertible debt?
Convertible debt done properly is a good means to provide financing for growth. If we can continue to execute our plan, then the market should reward us with a better valuation over time. If that occurs, then the use of convertible debt is good for the company and good for shareholders because it is less dilutive. People who bring this question up often do so because of ‘toxic convertibles’, which is a phrase given to instruments which tend to drive prices downward. That downward pressure is the opposite of what a strong growth company should produce. Stock market analysis shows that reasonable use of convertible debt can help reduce the cost of capital if done properly. In our case, we will be judicious in this. We expect that as our growth continues, the equity market and senior debt market will become increasingly attractive to us and will ultimately be the primary sources of financing.
10. Can you avoid using convertible debt?
Convertible debt done properly is a good means to provide financing for growth. If we can continue to execute our plan, then the market should reward us with a better valuation over time. If that occurs, then the use of convertible debt is good for the company and good for shareholders because it is less dilutive. People who bring this question up often do so because of ‘toxic convertibles’, which is a phrase given to instruments which tend to drive prices downward. That downward pressure is the opposite of what a strong growth company should produce. Stock market analysis shows that reasonable use of convertible debt can help reduce the cost of capital if done properly. In our case, we will be judicious in this. We expect that as our growth continues, the equity market and senior debt market will become increasingly attractive to us and will ultimately be the primary sources of financing.
