Expo Holdings Inc. (EXPH)

[Stock_Barber]

Veno/SR,

I'm not sure that I understand this at all... I've never seen anything like this!

Let me try to grasp this...

1) Expo needed to buy some machinery for about ~$500k.
2) JD & Glenn take out bank loans for the company and personally guarantee them with their own assets (let's say their homes).
3) They then take the equivalent ~$500k *loans* in cash from the company.

Is that how their loans came to be? If the company had ~$500k in the bank at that point... why were they taking out a ~$500k loan in the first place?

Let me assume that that is correct until someone steps in to explain to me how it is wrong...

Now let's say JD/Glenn had just taken out the ~$500k in home equity loans against their homes to get ~$500k in cash with no Expo involvement at all. They'd have the ~$500k, and larger mortgage payments.

Instead, basically the way they did it, was effectively like JD/Glenn taking out home equity loans from Expo rather than a bank... effectively putting Expo in the mortgage business at the height of the housing bubble...

So Expo finds itself cash strapped and massively diluting because their cash is tied up in JD/Glenn's homes?

Are JD/Glenn at least making monthly payments as they would if they took the home equity loans out directly? Does anyone know if they are making the company payments on the loans?

Can someone explain where this scenario is wrong?

I could be way off base here so no one take this speculation as fact, please...