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Berkshire Hathaway Inc. Message Board

  • ss613489 ss613489 Sep 28, 2013 10:22 PM Flag

    Goldman Sachs warrant agreement terms

    I don't know if anyone serious about investing still reads this board but just wanted to see if anyone else reads the modified agreement the same way I do. It seems to me that the value Berkshire gets is determined by the average price over the 10 day period but the number of shares Berkshire gets is determined by that average value divided by the last day's price. If that is the case, Berkshire may prefer a much lower share price for Goldman monday since 90% of the average price will be unaffected and that 10% that will would be more than offset by a lower share price used to calculate the number of shares Berkshire gets. See below:

    The warrant had provided Berkshire Hathaway the right to purchase 43,478,260 shares of Goldman Sachs' common stock, par value $0.01 per share, at an exercise price of $115 at any time until October 1, 2013. Under the amended agreement, Goldman Sachs will deliver to Berkshire Hathaway the number of shares of common stock equal in value to the difference between the average closing price over the 10 trading days preceding October 1, 2013 and the exercise price of $115 multiplied by the number of shares of common stock covered by the warrant (43,478,260).

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    • We want GS as high as possible because Buffettt plans to only keep his net gains in the stock with the balance being bought back by GS. He made the same deal with GE so let them both rise is my motto.

      He made this deal with GS and GE management about 6 months ago.

    • Does the Agreement provide for the price at which BRK's shares are issued? How do we know it is the market closing price on the 10th day? I would somwwhat surprised if BRK HAD TO PURCHASE its GS shares at this closing price. Since BRK's acquisition is essentially a private purchase from GS and not a market purchase, it could be that the 10-day average price is being used for both purposes.

      • 1 Reply to beachlawyer2003
      • The agreement says that Goldman needs to deliver shares equal to the calculated value and the value that they deliver appears to be calculated at the time of delivery which should after today's close. For example if the value of the 10 day average is $2 billion which it appears to be about now then they need to deliver $2 billion of stock. At the time of delivery they will need to deliver shares valued at $2 billion divided seems to imply that the number of shares is based on the price at the time of delivery.

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