<The reality is LFB is offering a loan of $15 Mil for six months at 8.5%>
This is what are management has accepted in closed door negotiations not what may be willing to be offered. We have all already acknowledged the poor leadership that has been provided by Cox and company. We certainly can't do any worse.
<Since the market currently says GTC is only worth about $11 Mil, ie less than the value of the loan, and the share price is currently around 11 cents and LFB has agreed to concede a value almost 300% the current PPS, why in the world if the deal fell through would LFB offer a better deal.>
They may not, but I speculate that they will if they thought that they would loose GTCB, although we will never know if the vote is affirmed.
<At that time they could buy the same number of shares at one third the price, or for that matter at least in theory "buy the company" for less than the amount of loan.>
I understand these principles but remember that the PPS is ultimately determined and driven by supply and demand factors in the market, not what LFB thinks that it is worth.
If they were forced to buy the stock through open market transactions, then this purchasing demand pressure would start to drive the PPS higher and in return increase shareholder value.
If there are enough sellers to supply their demand due to capitulation then they would get a bargain, no harm no foul, on the other hand if not, then at some point supply would dry up and the PPS would begin to rise. This in turn would force free market valuation back into the equation.
You see if LFB wants GTCB badly enough then no matter how you look at it, we need to force them to bid for it. Not hand it over through a weakly negotiated loan agreement.
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