What’s going on?
1 min read
We, as journalists, see an interesting flow of information. But every so often, something makes you scratch your head.
An email arrived in the inbox yesterday, proudly announcing that a particular company had just borrowed $250million. That's good, you think, and read on looking for information about how the money will be used. The answer in this instance? It won't be. The cash, less expenses, of course, is being passed on to shareholders.
When companies borrow money, you expect them to invest in new manufacturing facilities or something similar, making the business more profitable and then benefiting shareholders. Other times, they borrow money to juggle debt.
Handing cash to shareholders isn't new, but it's usually done via dividends or through buying shares back. Sometimes, companies will hand over cash from their 'war chests'. But borrowing serious amounts of cash to give to shareholders is a new one on me.
As Marvin Gaye once sang: "What's going on?"
