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Connacher is a growing exploration, development and production company with a focus on producing bitumen and expanding its in-situ oil sands projects located near Fort McMurray, Alberta

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Message: Once upon a time

Once upon a time

posted on Mar 10, 2009 01:03PM

Rebel, I was ask by few posters to not to respond to your post because you do not read them anyway. Since you are provoking the respond here it is a simple story which kine of explain the problem.

You may also google about different class of shareholders which may broaden your horizon on this mater.

Once upon a time was a guy who fell in love with the idea of buying the house. His friend, stockbroker, who tells everybody how smart and intelligent he is told him that this is right thing to do.

So, he bought the house for $500k and taking the prudent advice got the 40 years mortgage with the variable rate and $25k down.

Since his Copy and Paste business was doing good, profit margins were outstanding. Labour cost was minimal since copy and paste did not require very skillful or smart employees.

Appetite was growing so he decided to finish his basement and do some additions. He took the second mortgage and plunge to the never ending renovations and additions which extended him to $650k mortgage. No problem.

His cash flow from Copy and Paste business was good so he was happy to have the dream piece of real estate pie in the never ending real estate boom market.

Unfortunately the bubble burst, his cash flow deteriorated to the point that he could not effort to pay the interest on his mortgage. Getting the line of credit was the last option he had. At the end of this year there will be no more money left on this credit line account to support the payments.

He is a "smart cookie" and realized that the only option he had is to put the house for sale to get his money back because as a shareholder he has a full right to his piece of pie.

To his surprise he found that this is a buyers market and his piece of pie evaporated with the 20% market plunge. He try to talk to lenders but this scrooges are bad listeners and told him that his pie was just the illusion and he never read the small print on his mortgaged agreement. They told him, that they actually own his house including the improvements.

Hopefully his Copy and Paste business he loves so much will improve and he can prolong this struggle for few more years until he can sell his house to get his money back or get the his brother Don to bail him out.


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