Bourque Industries Inc (BORK)

[RockQQ]

Bourque's 'Death Spiral' Financing

Many of you remember the deals that Bourque made in 2012 and 2013 with 'death spiral' financing firms. Many of you believed this was a vote of confidence in company management. Bloomberg posted a very good and detailed article of how firms like this work, and I encourage everyone to read it to understand the nuances of what happened to BORK once management agreed to work with these companies, and so you will also all know how to react should such firms be tapped again in the future by BORK for 'financing' or 'capital'.

The article is here (the Bloomberg link is embedded in ZeroHedge's appropriate editorial comments):
http://www.zerohedge.com/news/2015-03-12/who-wants-be-penny-stock-millionaire

I was and am opposed to BORK working with such companies but of course I am not in management. The one thing good that comes from these deals is that companies reduce or eliminate their debt, allowing them to 'survive' by postponing otherwise likely bankruptcy far into the future. The cost? Share prices of equity inevitably fall to $0 or close to it, as has happened in our case as well. Basically, current shareholders pay for the right of management to hold on for a much longer period.

The only long-term benefit comes if management uses the extra time it gains from such deals, to actually re-build a company and achieve long-delayed sales growth. We all hope that will be what eventually happens to our BORK.

But it is exceedingly difficult and realistically very unlikely.

Nevertheless, please read the ZH article and the Bloomberg full link if you have interest and time, as this can be very educational for your future investing in penny stock, 'pink sheet' companies. JB was wrong to go in with such companies but, as do many managers in his position, he was happier doing that and screwing the share price, than declaring bankruptcy.

RockQQ