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Deceiving headline, here's the real transaction: > Berkshire is lending Lee $576 million at a 9% annual rate for the purchase and to refinance other debt.
by antr 7y ago
Deceiving headline, here's the real transaction:
> Berkshire is lending Lee $576 million at a 9% annual rate for the purchase and to refinance other debt.
- dsr_ 7y agoWhich is to say, he expects the newspaper business to not return 9% - otherwise he would keep it.
- smabie 7y agoThat’s not true, it’s about risk-adjusted returns. What Buffet presumably believes is that a 9% loan has a better reward/risk ratio than the newspaper business. As long as a return is greater than the borrowing rate, you csn synthetically make any return you want. This is why risk is important, because leverage is going to multiply it as well.
- StillBored 7y agoWhich is crazy, makes you wonder what the terms of the debt being refinanced are.