We are all business men and women here right? Where would they get the money to buy back the 5 million shares? If I came to you and said I need to borrow $1.75 million for a couple months max and I'll pay you 10% interest just to hold the money for those couple of months and I will put up as collateral say 10 million of my restricted IDWD shares (worth $3.5 million), what would you say? Now, I'm not a banker but that sounds like a reasonable deal.
Let's just say the dividend gets chopped up by taxes and fees and we only see a $0.40 dividend. These 5 million shares returns $2 million of value which pays back the $1.75 million loan plus the $175,000 of interest and leaves $75,000 of profit plus 5 million shares retired.
Hmmm. Bank gets about 40% annual return on their money = WIN. Insiders make an additional $75,000 profit = WIN. Investors get the benefits of 5 million less outstanding shares = WIN. Sounds like a win, win, win situation to me. Oh, and the US Govt gets their tax money. Can't forget Uncle Sam.
