Market Discussions

It also allows you to cash in on that "quick to switch to the new" Market Discussions rep.

Confirming sending of, erm receipt as noted above and I'm confused now.

I'd take Danni too.

Many MANY thanks Flakeys.

I'll write up a proper (ish) summary tomorrow, short version is all went pretty much as forecast in original (linked above) post.

ie. got me out of a hole, allowed for keeping production lines running, extra production facilitated by loan covered interest and more (but not much more, not much more at all) but just as importantly allowed time to gain ISK by more conventional means whilst freighter lines ramped up.

In short, would be exceedingly hard to pay decent interest on freighter production when more than liquidity is publically funded.

Firstly, thanks to the anonymous mod who kindly unlocked this post - one to be aware of for typically longer running bonds that the auto inactivity lock on threads comes in much quicker on these new forums than on the old.



Two reasons. First, whilst obviously I know of Chribba I don't exactly know him. That's not to say I particularly know Raw either but he tends to hang out in the channels I do, we occasionally post in the same threads, share a few words in the lounge etc. Raw tends to be active on the MD forum and has provided collateral services frequently over the years on the MD forum for this sort of offering - whilst Chribba obviously has done this also, it tends to be rarer and at the upper end, the 40b+ type affairs. I was confident that both Chribba and Raw would be seen by my potential investors as perfectly acceptable choices, and as personally I was happy to trust either with the collateral it simply became a matter of doing business with the person that you know / are friendly with / are more familiar with / see around more often - that person being Raw.

Second reason would be fees. Now I didn't approach Chribba so this may well be completely wrong, but my impression is that Chribba, whilst likely open to all sorts of arrangements, only really actively pursues the upper end, the supercap transfers and that sort of scale. As a result I (pre)judged him (undoubtedly unfairly) as less flexible on fees. With the small (in so far as 2B is considered small these days) scale of this bond and the very tight profit margins freighter production delivers (as anticipated in the original thread and confirmed below) this bond was very sensitive to additional expenses, that's one of the reasons why the 3% / 5% interest rate was so low. Raw was very considerate of these features of the bond and generous in accomodating it's profit pressures.

In short, Raw was seen as flexible and familiar. There's a really dirty joke in there somewhere.




During the lifetime of this bond there exists a 36 day window during which both freighter lines were operational at full capacity (earlier on in the bond the second line was in the ramp up component building stage, and at the end, well the next couple of freighters actually come out tomorrow on what would be the official end date of this bond). This 36 day window allows one to calculate the profitability of the operation running at the peak capacity possible with 2 freighter lines, 7 (NPC) manufacturing slots and PE0 freighter BPOs.

In short, 7 slots utilised at 2.84m profit per slot per day.

Extrapolating this to one 30 day month (596.4m) and compared to the total capital tie up (c. 13.2b - 10.5b in prints and 2.7b in minerals tied up in part completed components / freighters) we could say that profit against the total cost of operation is just 4.52% per month.

Clearly, funding the entire operation, or even a substantial part of it, publically would be largely impossible even at low interest rates.

Thankfully, this bond was only funding a small proportion of the operation. The bond directly faciliated the opening of the second providence line and effectively allowed for the production of four providence freighters. The profit from those four comes in at c. 429m (three quarters of that figure is from actual sales, the final quarter, the fourth providence, comes off the lines tomorrow on bond closure date and as such has an estimated profit). Subtract bond interest charges of 148m from this figure and we have an actual profit of 281m.

281m profit, from 2bn in two months is..... well it's not exactly spectacular is it? :o) Now naturally this figure is skewed due to the ramp up, the first providence didn't come off the lines till the 9th Sept, selling the day later. Still, never going to be stellar.


Overall, I'm satisfied. The profit of the operation is undeniably poor but I'm glad that it's come in around the figures that both I and Atima were predicting in the initial thread. Whilst funding an entire production operation publically remains unviable the liquidity loan has turned out to make sense as a practical cash-flow measure; it's akin to a company which routinely makes 5% profit dipping into an overdraft facility at 10% rates.




Further down the line I'd like to expand to three freighter lines, doing so can improve slot efficiency and profit to capital ratio - extrapolating the figures above to a third freighter line I'm looking at 10 slots utilised at 2.99m profit per slot per day with a capital tie up of around 18.5b (or 4.85% profit per 30 day month). As can be seen from this extrapolation, and the solid data above however, any public funding will have to remain on a similarly small (if not smaller) scale to remain viable. So in short, nothing on the immediate horizon and anything in future will be likely smaller than this bond.