Easyjet seeks state loans – but pays Stelios £60m

https://www.thetimes.co.uk/article/easyjet-seeks-state-loans-but-pays-stelios-60m-d26jghjtx

by DyslexicAtheist • 6 years ago

27 11 6 years ago

thetimes.co.uk

rahimnathwani3• 6 years ago

Elsewhere I read that the company's CEO and/or another spokesperson said that:

- the company is legally required to pay the dividend

- the company is looking for a 'commercial loan'

I don't understand the latter part. I read 'commercial loan' as a loan on commercial terms, which would include pricing in the risk of default etc. If that's what they mean, then why does the government need to provide the loan? Why not borrow from a commercial bank or issue bonds in the normal way?

If the answer is 'no one will lend', then the rate the government charges should be very high indeed (infinite?). If the answer is 'too expensive', then the government's price should be too expensive, too.

What am I missing?

redis_mlc• 6 years ago

- the company is legally required to pay the dividend

That's a new one to me, and I've been following the financial press for decades.

It could mean that the dividend was previously decided at a board meeting and announced to shareholders already, and they want to follow through to avoid a securities investigation.

rahimnathwani3• 6 years ago

If you had sold your stock the day after the shares went ex-dividend (a few weeks ago), you would have believed that:

- you will receive the dividend

- you will have no other financial upside/downside from easyjet's performance

If the dividend were to be cancelled, then this would transfer wealth from you (a past shareholder) to current easyJet shareholders.

Rules changing after you have made a trade isn't how financial markets are meant to work, because it reduces incentive structures.

I'm not saying what should happen in this case. Just pointing out that cancelling a dividend for shares that have already gone ex-dividend seems like it would require a lot of work to make sure that the money comes from current shareholders, and not past ones.

jacquesm• 6 years ago

He could plow that dividend right back in if he wanted to. So this is high grade BS.

rahimnathwani3• 6 years ago

Right, he could pay the tax on it and then use the rest to make a 'commercial loan' to the company.

stuaxo• 6 years ago

Sign of the times, just a month ago this headline would be on the guardian, never on this paper.

pottertheotter• 6 years ago

Can you explain what you mean by this? I am not familiar with the context.

thazework2• 6 years ago

The Guardian is read by people who think they ought to run the country, the Times is read by people who actually do run the country.

Symbiote• 6 years ago

The Guardian has a centre / centre left view, the Times is traditionally Conservative.

flashyfaffe2• 6 years ago

Clearly easyJet play the dirty game of privatising profits and nationalising losses. They have the right to have objective to give dividend. However no reason why the tax payer should bear their management decisions. If they need loan then let investors do their duties...or not.

Easyjet seeks state loans – but pays Stelios £60m

Related Stories