Replies to post #15845 on Nymet Holdings Inc. (fka NYMH)

[avdave]

jaunly, I think you misunderstood my post.

I agree with you 100% that shares are extremely valuable to any public company, and they can be used to make acquisitions that will add value.

Are there also other ways that companies can acquire things that will add value besides using shares?

You mention that I was impying that I believed that trading one asset for another by a company showed a lack of faith in the long term viablitiy of the company. I did not say that at all.

Using assets available to you to make acquisitions that will enhance your value is a true sign that you believe in what you are doing.

Again, I did not say that making acquisitions was a bad thing, but I also asked if there were other ways that a company could acquire things without using shares.

Let's say you ran in to an old friend that you owed $100 to and he asked for it. You didn't have any cash on you, but you had an ATM card and a bank was around the corner, and you had access to well over $100 to complete the transaction. But you also were wearing a Rolex (an asset presumably worth way more than $100) and rather than going to the bank to get the $100 out, you chose to give your old friend the Rolex to satisfy the obligation. You used an asset to satisfy an obligation, correct? But was that a wise fiscal decision on your part as to which asset you used to satisfy it? Maybe, maybe not.

To take that analogy to Perihelion, it was apparent that they had some minor current obligations to satisfy as they are building their business. They also have access to $20 million worth of Industrial Bond financing (according to a recent PR) Rather than "going to the bank" so to speak, and withdrawing an insiginificant amount of what they have access to, they chose to satisfy the obligation by using a MUCH MORE significant asset (roughly 60 million shares of their stock)

I'd like to get your opinion on how you view that business decision.

Now, going back to the Rolex for the $100 analogy, I can think of 2 scenarios that using the Rolex was a good decision.

1) You really didn't have the $100 in the bank and the Rolex was the ONLY way you could currently, or in the foreseeable future, satisfy the debt.
2) You knew the Rolex was a fake and only actually worth $20.
(or both?)

Under those scenarios, maybe it was a good choice of assets to use after all.

Regards.