Luxor Industrial Corp. V.LRL

RE:RE:RE:Yet another contract win

[Waterwheel]

mjh9413 wrote: Somone might think I am nitpicking but a comment on this part in the NR..."...Luxor is partnering with a Trading House to assist with the financing of the framing materials."

Looking at Note 6 of their past qtr financials this is a really expensive form of borrowing. Why can they not finance from the new loan?
Okay, so they are racking up new contracts but anything that negatively impacts margins where it can be avoided is a bad thing.
Also note the commitment is a daily payback amount but apparently they did not satisfy this, thus incrreasing costs on this peculiar form of trading house financing.

Back in January there was a serious cash crunch with lots of contracts. So they used a receivables financing which is expensive depending on the age of the receivable and the credit of the guy who owes them.
 Remember the credit line wasn't arranged until may.
 In the annoucement of the credit line they stated:

The ability to secure material financing through lumber traders together with the HSBC operating lines decreases the need for Luxor to raise funds through equity financings.

So they always intended to use the trading houses combined with the line of credit. (they gotta pay labor as well as materials.)
 The receivable financing looks like a totally seperate deal.

But, of course the company could tell you for sure.