Monday, March 24, 2008

Proposal 2: New and Improved

Hi all,
thanks very much for the thoughtful posts, as well as the IM conversations and notecards that you have all sent. I am truly humbled by your responses and the trust that you have shown.

So... Here's what I am concluding from what I have received and read:
1. No liquidation - nobody so far has suggested this and almost all have counseled against it.
2. All shareholders are to be treated fairly - whether they own 1 share or 400,000 - i.e. given the same opportunities. I am trying to do this, but I will have to reduce the number of small shareholders quickly in order to manager this.
3. There are a significant number of investors who want to stay invested, or even increase their stake in DDE. Many are willing to invest cash in order to buy out those that want to take money for their shares now.
4. There are some who want to cash out immediately, and I want to ensure they get the best deal possible in the current situation.
5. People like me. They really do. lmao


So, here is the new proposal, that takes all of your suggestions, and my own thoughts, and puts them together:

1. I will raise what cash I can without liquidating significantly (sell off mainland, perhaps one or two of the least profitable islands)

2. Once this is complete, I will seek investors that want to increase their stake in DDE. I am going to have a threshold of investment of 100,000L - this is the minimum amount for a "buy-in" to this process. In order to keep control of things - I will need all transactions to go through me - I don't want people making side deals. At this point, I do not have a good sense of how much capital will be needed for immediate share buy backs.

3. For anyone that owns fewer than 5000 shares, I am going to make a one-time payout of 3L per share for the shares you own. This is not optional. In order to be fair - I will offer a one-time pay-out of 3L per share for up to 5000 shares of any other shareholder that wants to take advantage of this. This will cost between 400,000L and 800,000L, and will reduce the number of shareholders to a maximum of 60.

4. Using the cash raised as per above, I will provide a one-time payout of 2.50L per share for all those that wish to cash out now, above the 5000 shares mentioned above.

5. After the initial buyout of those that want to sell their shares immediately - I will institute the following procedure:

A. I will collect a monthly salary of 250k Lindens.
B. All remaining profits will be distributed as dividends monthly. My expectation is that this will result in a monthly dividend of between 0.1L and 0.15L.
C. With my share of the dividends, and my salary, I will do a buy back of shares at rates on the following schedule:
- First quarter: 2.50L per share
- Second quarter: 2.75L per share
- Third quarter: 3.00L per share
- Fourth and subsequent quarters: 3.25 per share
D. As I have said a few times - I want to move toward obtaining full ownership of DDE with a view to eventually winding it down and getting out of the land business. It is looking more and more like this is going to have to be some time down the road - but I need you all to understand where that is going. Therefore, the buy back each month will be structured so that the full amount of my salary + dividends will be used to buy back shares. If I can get enough people that want to sell them voluntarily at the prevailing rate, then all is good. If not - I will buy back a equal proportion of everyone's shares at that rate until the cash is used up.

Under this model - people that need cash at any time can opt out at a fair price (remember that the liquidation value per share was 1.66L - and the going share price at the time of WSE closure was only 2.84). However, those that want to hold onto their shares could make a significant profit - shares sold after a year, at 3.25, will have likeley earned enough dividends that the total yield on them will approach 5L per share.

Now - this is all contingent on finding investors that want to increase their stake - those of you that have already indicated this to me will be contacted. anyone else that wants to "buy-in" should contact me as soon as possible.

It is also contingent on enough people wanting to sell immediately to make it worthwhile. To date I have messages from people indicating only about 350,000 shares that want to sell out immediately.

The advantage that I see in this plan is that it provides fair value all the way along. Smaller investors are provided with a premium price immediately (higher than either IPO or price or the last share price on WSE). Those that stay can opt-out any time - but the longer they stay, the more they make both in dividends and share price. As I reflected on things - I thought that is likely what would have happened if the company had remained on an exchange - a gradual increase in the share price over time, and decent dividends all the way along.

So I hope that this plan is a win-win for both investors and for me. Unfortunately - there is no reliable method for me to put this to a vote and know who is voting for what - (or to know that who is voting is who they say they are - lol) so I am going to have to ask major shareholders to either contact me inworld or to leave a message on the blog indicating their support or refusal of the plan. IF I get strong support for this, I will put it into motion.

Phew.

DD

PS: HERE IS THE LINK TO A LIST OF SHAREHOLDERS

17 comments:

Rich and Creamy said...

I'll 2nd this motion.

Also what's the time frame for the 100K Linden buy in?

Oh and in world I'm Dale Randall.

Delicious Demar said...

Thanks Dale :-)

I'd like people to state their interest in the next three days and I think the share buyout should happen by next weekend.

DD

Anonymous said...

Hello Del,

could you explain further point number 2?

If I'm doing a buy in, what kind of return can I expect?

Thank you

Eliale Morigi

Homer Horwitz said...

Hi Del,

I just had a look at the list of shareholders, and I'm missing my name on it. So I wonder: What happened to my shares? And, am I the only one that's missing on the list?

Greetings,
Homer Horwitz

Anonymous said...

Hi Del,
I admire your creativity to find a solution for your shareholders.
But I sadly gonna miss the stockmarket where people can freely trade your shares.
But it's a fact and you are not to blame for it.
I fully support your decision to delist from the WSE, it's a very brave step, considering the assets you have or had in the WSE.
I regret your decision to slowly wind down the cy.
As it stands now, not knowing all the details,I choose to hold on as a shareholder of your cy.
Mainly because you have proven to be a solid trustworthy businessperson.
And of course the ROI that always has been good.
I hope you will continue doing your business that way.
Del I wish you all the luck and strength to fulfill the job.
Thank you,
Richy Brynner

Alessandrocr Albatros said...

I agree with your plan, Del.

Delicious Demar said...

Thanks for the continuing commments. I am getting general support, but not unanimous, and a few emerging themes:
1. Some large investors don't want me to liquidate ANYTHING - they have offered to provide whatever cash is necessary to implement this plan.
2. Eliale asks a good question - what do I get for re-investing in DDE. I think that the way to resolve this is to say that the shares bought by the investors now will be the last shares bought back. They would not be subject to the forced buy-back until all other shares are bought back. In this way - they continue to receive dividends and will be bought back at 3.25L per share once all other shares are sold.

Of course, if at any time, these investors want to convert their shares to regular ones, and participate in the voluntary buy back schedule, they could do that.

Hopefully that is clear... and answers your question, Eliale. What you get is dividends for longer and the highest buy-back price.

DD

Delicious Demar said...

Homer - I will look into that - there are a few discrepancies which I am trying to understand. I have sent a message to the WSE asking for clarification, but am not sure if it will be forthcoming. I will contact you and the other parties involved inworld to resolve this.
Thanks.
dd

Anonymous said...

Thank you Del, but, what do you believe could be the buying price?

Eliale Morigi

Delicious Demar said...

Hi Eliale,
Since it will likely take at least nine months to get to the popint where these shares are being bought back - the buy price would be 3.25L per share.
Del

Anonymous said...

Hi Del,

sorry to raise my voice again - small investor that I am holding barely 0,3% of DDE - but it's mainly to applaud you once again for the creative, fair and straightforward way you are handling this.

I second your motion - the only thing I'd like to clarify is whether I understood correctly: The buyout of minor shareholders with less than 5000 shares is said to be 'not optional' - does that mean that even if I wanted to stay invested for a while longer, I couldn't if I didn't own more than 5000 shares? Don't get me wrong - I think this would be totally understandable, since ultimately re-owning DDE is after all the main objective of all the actions and the current list of shareholders is by far too long to be maintainable - but let me at least point out once again that I do regret this decision very much.

I wish you the very best for the future - and if you're in need of cash for the upcoming period, let me give you the advice that if you lowered the thresh for 'temporarily buying in' to maybe 10.000L, I'm sure there'd be plenty more poeple willing to re-invest for a limited period of time.

Best regards,

Positron Sands

Logansan Oh said...

Hi deli del,
Impossible to get you in-world (you need a P.A?), I am extremely interested in staying on-board with you. I will get a notecard out to you later today and hopefully we can catch up sometime shortly to discuss.
Well done BTW.

Logansan Oh

Saethan Zwiers said...

My name seems to be missing from the list of shareholders... is there a problem being caused by those who had theirs up for sale at the time of the WWE delisting? I swear I had 10,000+, more around 14,000 since I recall their total worth being over 40,000 L$.

Anyways, I'd definitely go for buying out my first 5000 at 3 L$ each... that seems rather generous, actually. After that I'd give up everything else easily at 2.5L$. The dividends of DDE over the time I've held it have much more than made up for the difference of when I bought a number of shares at L$ 2.75.

Saethan Zwiers said...

And by WWE I mean WSE.. d'oh.

Anonymous said...

Ah, I'm a bit bhind the curve at the moment. Let me see if I have this right...

I own around 11k shares.. so I can sell 5k back at 3L/share, then keep the other 6K, continue to collect dividends on it, and sell it back at anytime at a slowly increasing scale over the months? To be honest I wouldn't mind liquidating half my shares, but I would rather not liquidate ALL of them either. :)

-Roburt Musketeer

Delicious Demar said...

Hey Roburt - yes you have it right. You don't need to sell any shares right now if you don't want to. But I will buy back the first 5000 shares for 3L each, and you can keep the 6000 remaining, or sell them (or a portion of them) for 2.50L each.
Or, you can keep however many you want of your shares. Whatever shares you have will be eligible for monthly dividends (I estimate between 0.1 and 0.15L per share per month in dividends), and they will be bought back over the coming months at the rates laid out in the schedule mentioned above.

In case it wasn't clear - the gradual buy back of shares is not intended to be optional - all shareholders will have a portion of their shares bought back each month.

If additional personal cash becomes available, I may make offers to buy additional shares on an "opt-in" basis at the prevailing rate for that month.

Hope that makes sense :-). let me know what you would like me to do with your shares - you can post it here - or you can send me an IM or a notecard in SL™.

DD

Anonymous said...

Hmmmmm. As tempting as it is to cash out half my shares, I think that for the time being I will hang on to them, assuming the 3L/share for the first 5000 shares doesn't have a time limit attached to it?

I would say that I'll hang on to them a bit longer to allow you more time to liquidate assets and proceed with the buyback, but I get the feeling that you haven't receieved too many voluntary sales. :)

I think I'll hang onto my shares for a bit longer because you have two very appealing attritubes that are unfortunately rare in combination. You seem to have both integrity AND competence, and the way you are handling the current situation just underlins this. Most other CEOs have , at best, one attribute or the other. And far too many possess neither.

So I think I'll hang around a bit longer. I think you're finding that it's a fairly popular sentiment in your stockholders. :)

-Roburt Musketeer