On 2021-12-05 02:27, Snidely wrote:
> Don't expect SpaceX to go bankrupt. Don't expect big shock waves to
> ripple through the markets because of the email. And even more, don't
> equate "bankruptcy" with "disappearing". Certainly didn't mean that
> for GM.
Chapter 11 generally (almost always) involves existing shareholders
seeing their shares either voided or highly diluted. (they are
unsecured creditors)
So if the project is late and needs more capital (as is common for such
a large project), any new investor, fearing bankruptcy, will only invest
in form of secured bonds with strict restrictions which will cost SpaceX
more.
Here is an example:
When Bombardier ran out of funds because its C-Series (and other
projects) was late, various portions of the compay were recapitalized
without going through formal canadian equivalent to Chapter 11 (called
CCAA).
The "Transportation" division (trains) was spun off into a separate
company, and new shares issued to Caisse de Dépôt du Québec (CDPQ)
(pension find) in exchange for a few billions of $. There was a caveat:
the money losing division had to provide garanteed dividends on the shares.
Bombardier, still struggling to survive, could not afford to buy back
the shares issued to CDPQ. And it could not afford to continue paying
dividends, so its only option was to sell the company to Alstom ( a deal
conveniently arranged by CDPQ who then negotiated a stake in Alstom
which made it its largest shareholder).
One never jokes about bankruptcy with a public company because it hurts
the company's ability to raise capital and then ability to exist as
independant company.
What Musk did was shout to the world of potential investors is that he
is no longer siure he can see the project to completion.