Replies to post #23297 on Sino Agro Food Inc (fka SIAF)

[treit2002]

You deride Swedes because English is their second language, when you want to ask a CEO what dilution is?

Why not follow up with, "what is the process when your revenues add $1M?, or what is income?"

As a side note, many here call new share issuance "dilution" while they also say the new shares add to eps. So, yes dilutive to shareholders' percentage interest in the company, but accretive to the economic worth of the same shareholders' interests. So, I think share issuance is the better term.

It's widely acknowledged that shares hitting the market is the problem, not effect on earnings. I too was very disappointed in the magnitude of new shares to be added. But at least this time there are factors and potential factors to mitigate or eliminate the dumping effect, and/or to mitigate or eliminate the need to put the shares in the hands of short term sellers.

Time will tell. Won't have this problem in 2014.

[RealDutch]

The process of settling debt with stock

Since no-one else will have a shot at this, I will give it another try.

JV-partners pay for development costs of new projects. SIAF get paid well for design/construction. They use the profits to purchase a 75% stake (they own 25% initially when construction is completed with the JV partner owning 75%). A lot of the time, the profits from services is tied up so they can repurchase 50% resulting in a 75% stake.

But new projects require startup capital. To buy inventory and pay for salaries when the JV isn't profitable yet. A lot of money is needed. SIAF and the JV-partner usually share these costs. But SIAF doesn't pay them with money, they give the JV-partner stock for debt settlement instead. The JV-partners are not allowed to sell the stock until the debt is at least six months old. Then, they will usually sell it becaused they have invested so much already (we're talking about $10M here).

So, the good part is, SIAF can grow very fast. The bad part is, IT'S KILLING US.