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@Don Konipol
Great comments as always.
Two things stick out to me on this post - start at the beginning of this thread - definitely red flags were discussed two years prior.
Second is it has been 90 days so I am curious if everyone got converted to equity and what has happened since ?
Nothing new on the conversion process since an update 3 weeks ago, which didn’t say much. Sept 20 was 3 months from the default and was the timeframe given to complete the conversion. I’m guessing the process of valuation and creating legal shares was a bit more involved than Marcos had expected. Still waiting.
Curious what would happen if there were $50M in investors he owed money to but then the company valuation came back at $25M. Basically would he then say he has zero shares?
Chris, the early updates to the default sounded more like prospectus docs identifying investments NCM were partial owners in with expected future valuation looking very strong. Those same updates were short on information related to the equity conversion except that they were working on it. Now that the 90 day deadline has expired and we haven’t received certified equity nor an update informing note holders of their status, concern is definitely growing.
If valuation came in at 50% of investor debt, then it would seem that share valuation would be just that, 50%. But if the blue sky materialized then repurchasing that equity could still turn into a win/win. NCM appears to not have been ready for this process since it had experienced a strong market for many years. Marcos reputation has been solid up to now so many note holders believe that he intends to make good on this turn of bad fortune. Other seem to want to hang the guy without a trial. (Figuratively)
BP sure has seen the hang em high folks come out.. what I find amazing though is once queried those same folks admit to not really knowing what they invested in.. Which leads to other posters to offer no sympathy for those investors and then the name calling started.
Myself I firming believe Norada needs to issue those shares at what ever valuation they are so they at least honor that part of the contract. I doubt Norada Guaranteed these investments so if they went down remained neutral or went up does not matter. To me they need to issue those
There are different reasons or situations when a deal "goes south". Investors who aren't experienced, knowledgeable nor sophisticated are taken by suprise that their "promised" return hasn't materialized. They immediately believe they've been defrauded, which of course MAY be true as a lot of these investment deals are scams from day one. If they are then shown that fraud was not involved, they next go to the theory that the sponsor was incompetent, made a "bad" investment, etc. Again MAY be true. However, there are two other possibilities when an investment doesn't work out. One, the investment may have been one that worked well but a mostly unforeseen occurance happened, to either the economy in general or to the subject investment in particular. Second, the investment may have been made anticipating a chance of failure; for example an investment may correctly analyze that it has a 50% chance of a 25% ROI, a 35% chance of a 50% ROI, and a 15% chance of a 50% loss. When the loss occurs, which it will in one out of seven times, the unsophisticated investors does not understand it's merely the law of mathematics and wants to attribute something sinister to a statistically verifiable event.
This is why as a sponsor - syndicator - fund manager I DON’T like the deals that allow the general public to invest. I understand the argument that the general public should not be restricted from investing in “highly profitable” deals, but what tends to end up being offered to unaccredited, unsophisticated investors in the “junk” end of the investment spectrum.
Don, I completely agree. This offering was only to accredited investors. I am a fairly new accredited investor myself but I read the note from front to back and understood the risks. Sad that it only lasted a few months before default for me but those are the risks. Accreditation today has a seemingly lower bar than it was, say, ten years ago due to inflation. So there are many more participants at the novice level who may not understand the risk/reward nature of this type of investment.
One thing that the Norada default posted here has done is to provide some fairly sound financial advice from different advisors and seasoned investor who understand these things.
Finally, I might be novice to alternative investments but to your point, I believe Norada just ran into an economics wall and lost its ability to meet obligations. And I believe they are doing everything they can to make this default right. Patience, I believe, may be the best practice to recover principal. Nevertheless, some outside pressure (i.e. SEC) might be good to dig into motive and assure this thing is on the radar.
