From http://www.moneyweb.co.za/mw/view/mw/en/page38?oid=81346&sn=Detail Peregrine CEO Sean Melnick sold 2m shares for R28,8m last week but matched the sale with a purchase of 200 000 futures on the shares for R29,6m. "It was purely a funding transaction", he explained to Moneyweb, "The family trust wanted to make an investment. Rather than borrow against shares that I have in Peregrine, I decided to borrow 2m shares at a cost of 0,5% from an institution. "I sold those to raise the cash we wanted for our investment but opted to maintain my exposure to Peregrine by taking a futures contract. Because one is dealing in the wholesale market, it works out at one or two percentage points cheaper than borrowing from a bank. Moreover, with shares as security, the bank would want four or five times cover. This way, I got access to the entire R28,8m. "I am exposed if the shares go down and in that event, will have to put up margin."
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