For this week’s blog, I have found an article in a Dutch newspaper. I’ve found a really interesting article in ‘De Standaard’ that deals with ‘capital increases’ and I found it really suitable to use in our corporate finance’ blog.
The article is about Option, a Belgian technology company. Because of the bad times this company has had in the past, they want to try to boost the profitability of the company by incorporating some new strategies. To finance and achieve these strategies, they want to introduce a capital increase, along with some organisational changes.
It is not the first time they have introduced a capital increase and in fact, Option is just one of a few companies that are takig this approach.
A part of the strategy will be the approach of new market priorities and as a result, the company will most likely become more like a niche marketer, instead of having the reputation of a ‘high volume, low cost’ - producer that they have now. This reputation was forced on them these last several years in there ‘fight’ against the Chinese competitors. Option on the other hand is a company that excels in innovation and so would be far more successful in a niche market.
According to the founder of the company, one of his main concerns and therefore the goal of this new strategy, is to safeguard the company’s independence.
I actually loved reading this article, because it really showed a different way of financing the corporate strategies, plans, etc. Instead of running to a bank, Option chose to collect money from the public, which is much safer. Well, this of course depends on whether they are going to issue bonds or shares. The safest thing to do is to issue shares, because once the money is paid for these shares, this money will most likely never leave the company again, unless they introduce a capital decrease. This money now belongs to the private equity, which means they have less worries in paying back creditors.
I also think the founder is doing a really good thing by trying to keep the independence of the company.
I was glad to find an article that wasn’t for once talking about how bad a company is doing because of the crisis, but to find a company that has good prospects for next year.
Bye!
Lien Vanneder
Please do read this article on: http://www.standaard.be/Artikel/Detail.aspx?artikelId=T32GH49S&word=option
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Dear Lien,
BeantwoordenVerwijderenAs allways, I can't give any critic about your writing.
I admire the fact that you dare to take a Dutch article. I believe it brings you at a higher level!
Your blog reads smoothly and is clearly understandable.
Just like you, I'm convinced that to issue shares, is the safest thing to do.
Until next week
Evelien Van Gaeveren