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1862: Railway Mania in the Eastern Counties» Forums » Rules

Subject: Refinancing Question rss

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Patrick Menard
United States
Lincoln
Nebraska
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We had an interesting situation in our last game with regards to refinancing.

A player opened a non-charter company during phase D at 100, so it had 420 capital after tokens. By the time it ran in the OR, all the D's and E's had been bought.

Under forced train purchases, are you required to try 7.11.1 (Sell Company Stock) before trying 7.11.2 (Refinance)?

It had 5 shares still in the company, so selling 2 would have been enough to buy the last F. Instead, would he have the option to refinance (gaining 1000), and then buy both the F & G?

We thought it was a bit fiddly being able to refinance while the other option was available.
 
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JR
Canada
East Sooke
British Columbia
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I do think that's legal and I seem to recall Eric Flood posted just such a machination at some point in a comment thread.
 
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Occu Pant
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Clive
Iowa
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Umbrage wrote:
We had an interesting situation in our last game with regards to refinancing.

A player opened a non-charter company during phase D at 100, so it had 420 capital after tokens. By the time it ran in the OR, all the D's and E's had been bought.

Under forced train purchases, are you required to try 7.11.1 (Sell Company Stock) before trying 7.11.2 (Refinance)?

It had 5 shares still in the company, so selling 2 would have been enough to buy the last F. Instead, would he have the option to refinance (gaining 1000), and then buy both the F & G?

We thought it was a bit fiddly being able to refinance while the other option was available.


7.11.1
... the company may sell these shares in order to buy a train...

So, yes. You can elect to not sell shares and refinance instead. And when I was at Chattanooga last year, that seemed to be a popular move with the sharks.
 
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Mike Hutton
United Kingdom
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Paladin82Y wrote:

7.11.1
... the company may sell these shares in order to buy a train...

So, yes. You can elect to not sell shares and refinance instead. And when I was at Chattanooga last year, that seemed to be a popular move with the sharks.

It isn't always obvious that refinancing is the best option. The maths (if you work them out) are pretty close:

Refinance - you get 2 trains instead of one but have half the stock (2.5) and have to pay £45 to get back to three shares. The company in this case will have £1420 to pay for two F trains. But - and here's the rub - it will end up with 2 of its own shares rather than 3 as it won't be able to redeem the option share. In this case an E+F option is more attractive than two Fs!

Sell stock - you have 1 train but 3 stock shares in the company and 5 personally owned.

Which is better? Well, this all depends on what routes the company get over the following two rounds, and whether you want to use the company as merge fodder. If it's hemmed in then the extra train is not likely to be a lot of help. You may just as well have stuck with one. F trains are usually significantly worse than H trains, particularly for freight. In addition if it's a Local permit company you should find it easier to have the company buy an H train in the following stock round, after you have bought the stock in the company.

It also depends if you've got priority. Which is unlikely if you've just started a new non-chartered company. But it could happen...

The other thing to consider is that if you go for refinancing and your opponents have cash in hand at the end of the round, the most shares you'll likely get your hands on in the resultant flush company will be 2 extra = 5 (for a 4-handed game). If you choose to sell shares you will start with that number and can guarantee holding at least 6, and with priority you should get up to 7. It might not seem like much, but this is a game where the winning margin is almost always less than the price of a share.

Of course, then there's the possibilities of mergers and so on. If you're planning on a quick merge afterwards then it is less clear, as getting the 3rd train into your company can be difficult if you are merging into a "shell" with no permanent trains. If it already has one then you won't necessarily be in as much of a hurry to get the 3rd train, as it will take a round or two more before you will need it to get that 3rd or 4th stock jump.

What I'm trying to say is that it's Complicated. I have heard sharks lament refinancing in this way after the game when they realise that they could have saved the extra share by selling company stock rather than refinancing - and it's usually down to the fact that they couldn't get the new company strong enough routes as quickly as they had liked, or had to wait too long before merging it into another company.
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Patrick Menard
United States
Lincoln
Nebraska
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Mike Hutton wrote:
[q="Paladin82Y"]

Refinance - you get 2 trains instead of one but have half the stock (2.5) and have to pay £45 to get back to three shares. The company in this case will have £1420 to pay for two F trains. But - and here's the rub - it will end up with 2 of its own shares rather than 3 as it won't be able to redeem the option share. In this case an E+F option is more attractive than two Fs!



In this case, it was a choice of selling 2 shares and buying an F, or refinance and buying an F+G. Rusting all the D's would have made it the far better choice. The player would end up with 3 shares worth 210 (or he had thought about possibly merging with another company and would have ended up with 5 shares in that one).
 
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Lance Harrop
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Manassas
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Mike Hutton wrote:
What I'm trying to say is that it's Complicated. I have heard sharks lament refinancing in this way after the game when they realise that they could have saved the extra share by selling company stock rather than refinancing - and it's usually down to the fact that they couldn't get the new company strong enough routes as quickly as they had liked, or had to wait too long before merging it into another company.


Which just proves you've made a really good game.
 
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