New Home Company IPO

Tyler Durden said:
^^^Its a way for the founders to buy new ferrari's and mansions.


If they wanted money, why not sell debt rather than ownership stakes in their company?  Interest rates are still low, comparatively speaking for corporate bond offerings.  So, servicing that debt until its' retired would be a lot easier than being forced to meet shareholder earnings expectations each qtr.
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through the 9 months ended 9/30/13 they had 24M in sales from homes sales and almost 34M from fees as a builder (for TIC perhaps?).  their margins are pretty low on both the home sales (17.5%) and fee building (9%). i dont think there is any way they could borrow anything to close to the 86M they raised in the IPO and they already owed 17M to an investor so a bank probably wouldnt give them much more if anything.  if they did borrow, and sold debt to the public that would still require them to file with SEC and are subject to all the filing requirements so now they raised a good chunk of change and can also do public debt offerings. if they just borrowed from a bank without the IPO they would be able to borrow a lot less and probably not be able to do larger communities and would be stuck doing smaller communities.
 
Chairman said:
Cash out via IPO market. I wouldn't be giving them my money that's for sure.
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insiders didnt sell their shares to the public, which is common, like facebook, in that case the insiders are cashing out.  but in six months or so when the lockup expires they can cash out.  the CEO has about 700K shares so is sitting on about $7-8M
 
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