eljuez (Hon.Douglas) who serves in WMI LT quoted this posting:
I understand that some are disappointed because of dilution. Maybe I am missing something but almost every company that grows has dilution as part of the growth process. We only have 200 million shares. Big companies have Billions of shares. You need lots of shares if you are going to get lots of people to invest in a company. The only important thing about dilution is that you need value to go up as more shares are created and distributed. If KKR brings value to the company, and the price of your shares goes up, then why waste your time worrying about dilution. I think the way that we small retail should look at this is to simply focus on the big picture and not get involved with the details. If this goes together as we (at least I ) hope, KKR invests money into the company with a base price of around $1.35 per share. KKR only invests where they think they will get a good return on their money. I don't know or even care how much KKR will be investing but it will be at least hundreds of millions and possibly into the billions. However much they invest, they will expect at least a 500% return in probably a 3 to 5 year timeline. Maybe even a higher return. To me that means they expect to get at least $6.75 for each share they are buying. That is now the bottom of my expectations. It could go up from there. KKR usually invests in companies and then holds them for awhile and then sells them. They are not into running companies long term. I think they will plan to add companies by acquisition, clean up the new company's balance sheet and show a profit, and then sell the company for the maximum they can get. We will be passive investors just along for the ride. When we get sold, we will cash in, and depending what our acquisition costs were, we might even do better than KKR. So, I am not at all concerned with dilution. I am only concerned if KKR can bring at least a 500% profit for whatever they invest. If they do, we will have done OK. If it turns out the acquired combined company with our NOL's sells for a high price to earnings ratio, we might get many times my bottom base price of $6.75 a share.