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HomeAway, Inc. (AWAY) Message Board

  • lvotp lvotp Mar 25, 2014 10:19 AM Flag

    HomeAway announces proposed $350 mln offering of convertible senior notes due 2019??

    what exactly does this mean?

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    • it means they will raise money by issuing interest bearing notes (the written promise to repay) and give those note holder the right at a later date to convert those notes into AWAY stock. When note holders convert, it will add to the total number of shares outstanding and thereby dilute the shares to that extent. Note holders will convert if the shares are rising at a better clip than the amount of interest they receive on the note. Hope that helps.

    • they raised cash now to fund operations/acquisitions but will tend to dilute the stock later on if the price of the stock rises.

      the bottom line is that they need to make good use of the money [ROI] to offset dilution down the road. So it all boils down to making good investment decisions with the cash they raised. All businesses face this issue....making good Return on Investments.Nothing really new under the sun. A very wealthy friend of mine told me that we don't invest in companies so much as we invest in management of those companies. So we need to trust that they do the right thing with the capital they raised.

 
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