Replies to post #4847 on Solar Wind Energy Tower Inc. (fka SWET)

[Nomad505]

No, I don't think the term buyback is appropriate. The company used the word retired. I suppose it's better, but still not exactly descriptive.

A buyback is when the company uses capital to buy shares on the open market. http://www.investopedia.com/terms/b/buyback.asp

The shares being retired were never sold into the market. Since they weren't sold to investors they can't be bought back.

We have an example of the process with the recent financing deal. Shares are created & are held as collateral. They wouldn't be sold into the market until after the loan matures.

If the loan hasn't been repaid by that time the bank would get control of the shares and be able to sell them into the market if they choose to. The bank may also choose to retain the shares as a long term investment.

If the loan is repaid the shares that were created are essentially destroyed by reversing the process. The company is using the term retired to describe this.

I think that the shares are considered as authorized but not outstanding therefore they're not part of the float. They're not fully diluted.

Aren't they something other than a regular share? I think It's some kind of a premium share that's converted into common shares. Perhaps, this is the heart of the matter.

I may be a little off with my thinking.
I'm no expert at this...