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Conference hydra::amiga_v1

Title:	AMIGA NOTES
Notice:	Join us in the NEW conference - HYDRA::AMIGA_V2
Moderator:	HYDRA::MOORE

Created:	Sat Apr 26 1986
Last Modified:	Wed Feb 05 1992
Last Successful Update:	Fri Jun 06 1997
Number of topics:	5378
Total number of notes:	38326

534.0. "Buying $60 million of debt?" by BAGELS::BRANNON (Dave Brannon) Fri Jun 05 1987 17:09

Got this from VNS a while ago.  Can somebody explain what this business
    move means?  Is it like getting a second mortgage on your house?
    
 Prudential - Buys $60 million of Commodore debt
   Commodore International Ltd., the West Chester, Pa.-based microcomputer
 maker, continued its financial turnaround Thursday with an announcement that
 it placed $60 million in debt with Prudential Insurance Co. of America. At
 least half of the proceeds will be used to retire more of the company's bank
 debt, which stands at about $90 million, Irving Gould, chairman and CEO, said
 in an interview from his Toronto office. He said the rest will be for working
 capital. Commodore said the private placement consisted of $20 million of
 senior seven-year notes and $40 million of subordinated seven-year notes and
 said Prudential would hold warrants for 2.25 million shares of Commodore stock
 exercisable at a premium above the current market price. The premium was not
 revealed.
	{AP News Wire, 28-May-87, 22:02}

T.R Title User Personal
Name Date Lines

534.1 Sounds good to me TLE::RMEYERS Randy Meyers Fri Jun 05 1987 17:28 12

T.R	Title	User	Personal Name	Date	Lines
534.1	Sounds good to me	TLE::RMEYERS	Randy Meyers	`Fri Jun 05 1987 17:28`	12
	Re: .0 The situation is like taking out a second mortgage on your house and using the money to pay off a third of your first mortgage. I am not "Joe Stockbroker," but this sounds like good news and I would expect that Commodore stock prices should go up in response. First, it is a sign that a very large company (Prudential) is confident in Commodore's future success. Second, Commodore is paying off a lot of what were probably very high interest loans with money loaned at a much better interest rate. Third, Commodore now has a lot of liquid cash to be used for development and (gasp!) advertising.

Re: .0

The situation is like taking out a second mortgage on your house and
using the money to pay off a third of your first mortgage.

I am not "Joe Stockbroker," but this sounds like good news and I would
expect that Commodore stock prices should go up in response.  First, it
is a sign that a very large company (Prudential) is confident in
Commodore's future success.  Second, Commodore is paying off a lot of
what were probably very high interest loans with money loaned at a much
better interest rate.  Third, Commodore now has a lot of liquid cash to
be used for development and (gasp!) advertising.