A big number of good companies have been humbled lately due to
their excessive borrowing (and/or particularly that of their
controlling shareholders). To me, these are just statistics. There
is nothing special.
Until today. A friend who is the controlling
shareholder of a listed company has just called to
say that his stock price has fallen sharply due to his borrowing
(with his corporate stakes as the pledge). He may have become
bankrupt despite his many enterprises. His financiers (the
investment banks) will be left with no option but to sell his
shares even faster. And his personal debts will only grow on the
back of his breach of this or that undertaking.
I was saddened though not surprised. Four or five years ago, he discussed his daring activities with me. I lobbied strongly against high leverages. I have warned him repeatedly since then. But his call today shows that I have been a terrible lobbyist and failed adviser.
Until today. A friend
I was saddened though not surprised. Four or five years ago, he discussed his daring activities with me. I lobbied strongly against high leverages. I have warned him repeatedly since then. But his call today shows that I have been a terrible lobbyist and failed adviser.