Borrowing to ensure adequate capital for expansionJust thought I would throw in my opinion on the COS borrowing. It seems we all agree that cash is necessary to pay for the big capex over the last couple of years and the next year or so. The only question is how to procure it. Some would have less debt and rely on the cash on hand to pay. This unfortunately puts the company in a position where it would have to substantially cut or eliminate the dividend. Many of the investors in COS are income oriented and a drastic cut or elimination of the dividend I believe would have put the stock in a tailspin and many investors would not return. The other problem is if there were operational problems or a stock market hiccup the company might not be able to raise the capital when needed. This is to much risk and the credit rating agencies would recognize it and I believe downgrade the companies rating which would carryover into the share price.
Paying the interest on longterm debt and bank fees on standby bank loans etc is a minor cost compared to the alternative I positioned above.
Simply put it is better to be safe than sorry. Soon enough COS will be generating much higher free cash flow and dividends and that is what most of us have been waiting for. When that happens, and hopefully the market will see it coming, the share price will rise accordingly.