That puts a number on the debt - $20 million - and that may have been Hero's red line. It would make sense since they paid $20 million for half of the company. Once the debt hit that limit something had to give.Originally Posted by Hughlysses
It also gives us something to think about in a bid scenario. Imagine Polaris (again completely hypothetical) bids $40 million. In very simple terms (and I'm sure it's more complicated than this) $20 million would go toward the debt and Hero and Erik would each walk away with about $10 million. If Hero bid $50 million, they'd be paying Erik and themselves (after debt) about $15 million each, so they would only have to put out $35 million. That gives them an advantage over anyone else who is bidding.
It also illustrates that if the bidding gets crazy (lets say someone bids $90 million) Hero could walk away with $35 million and actually have made money on their initial investment (I don't think that will happen. I'm just throwing it out to illustrate).
With that dynamic in mind, it's at least possible this is somewhat amicable and Hero has a number they'll go to and if someone outbids that number they'll walk away happy with the money they'll keep (while getting out from under the $20 million debt). And if they have decided to go this way to see what happens, they may still be willing to work with Erik after everything is done (and they own the company outright).
It could be a lot simpler than I've been imagining and just a way to sort out who walks away with what, and if the company on the open market might be worth more than Hero thinks it is.
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