BioAmber Inc (fka BIOAQ)

[eddy2]

Your right in that the company can’t be sold cause technically the assets now belong to the ones who supplied the debt. What can be sold that isn’t the banks is the money raised for the tax credit that was to be paid out to the creditors as the loan was paid down.

The excess credit raised through trade still belongs to the common share holder. If you have a debt of a $1 that is not washed you owe a $1 back of washed money. If that money is washed then you owe back $.65.

If the money lent from the bank is washed then it changes the outcome cause now the company must pay back a $1.65 but will have a tax credit of $.65 until the time of payment or an equity debt owing of that amount.

You can income split that borrowed capital taking partly washed and the other portion dirty.

Of course they must advise you of the clean and dirty ratio of the borrowed capital. Often the first trench will be clean and the second the dirty portion of the debt will be released pending the hedging that can be achieved from goodwill and receivables along with the efforts achieved from the effects of short selling the equity in question.

Is it risky, you bet. Are they going out on a branch and cutting that branch of from the very truck that holds it all together, well of course they are. That is the risk associated in leveraging there tax position for the possibility of greater capital gains down the road.

Is there the chance of hitting a pot hole in that road when one takes on third party debt in receivables and the offering of goodwill to have a service or product developed for you on a timely manner, of course there are.

Hang on to your hat it could get interesting from here on out.