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1846: The Race for the Midwest» Forums » Rules

Subject: Forced train purchase share issuing edge case question rss

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Scenario 1:
Let's say the company market price after running and paying out is $50, and is 60% owned by the president and there is one share in the market, and a force buy occurs where the company needs more than $40 to buy a train. When force issuing shares, the potential revenue from the forced issuing is:
1 share = $30
2 shares = $40
3 shares = $30
4 shares = $0

How many shares must the president issue?

Scenario 2:
Same scenario but no shares in market, and the company only needs $30 to buy a train. How many shares must / may the president issue? Can the president choose to close the company by issuing 5 even though issuing one would be enough to buy a train?

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The way I read it, you must issue shares up to the allowed limit. The fact that that gets you no cash is too bad. You ran the company poorly and they stock value is going to reflect that.

So, issue 4 shares, then go into your pocket to get a train.

(Actually, this will close the company, since issuing all those shares makes the stock go to 0 or did it go to 10?)
 
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Pete Goch
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Unless you're trying to close the company why wouldn't you just issue the shares at the beginning of the round and avoid the additional penalty?

Just sayin...
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pilotbob wrote:
(Actually, this will close the company, since issuing all those shares makes the stock go to 0 or did it go to 10?)


It will go to $10 in Scenario 1.
 
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TheOneTrueZeke wrote:
Unless you're trying to close the company why wouldn't you just issue the shares at the beginning of the round and avoid the additional penalty?

Just sayin...


Yes, as admitted in the title, this is an edge case, but which the rules of the game allow you to choose to enter. I am curious about rules correctness though, as I have implemented 1846 programmatically, and want to make sure I have it correct.


It comes down mostly to the question of whether or not the forced issuing must maximize revenue or number of shares issued, or if it is president choice.
 
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Tom Lehmann
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stealthychalupa wrote:
Let's say the company market price after running and paying out is $50, and is 60% owned by the president and there is one share in the market, and a force buy occurs where the company needs more than $40 to buy a train. When force issuing shares, the potential revenue from the forced issuing is:
1 share = $30
2 shares = $40
3 shares = $30
4 shares = $0

Um... If the President owns 60% and 1 10% share is in the market, then how does the company have 4 shares to issue???

10 -6 -1 = 3.

Quote:
Scenario 2:
Same scenario but no shares in market, and the company only needs $30 to buy a train. How many shares must / may the president issue?


Either 1, 2, or 3 shares must be issued, as any of these permit the RR to buy a train.

Quote:
Can the president choose to close the company by issuing 5 even though issuing one would be enough to buy a train?

First off, in this "same scenario" where the President has 60%, there aren't 5 shares to issue!

Second, in the case where the President has 50% and this scenario is actually possible, the rules requirement is that the RR "must buy a currently available train, of either type, from the bank using all of its treasury with the remainder coming first from issuing shares *up to* the normal limit [...]" (6.86, emphasis added).

Since you *must buy a train* and can do so by issuing 1, 2, or 3 shares, the president cannot close the RR by issuing 5 shares.
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Tom Lehmann wrote:

Um... If the President owns 60% and 1 10% share is in the market, then how does the company have 4 shares to issue???

10 -6 -1 = 3.



Yeah oops, forgive my error. The question can be the same though if we assume president owns 50% in both cases as you noted.

Thanks for the clarification and the error catch Tom. So correct me if I am wrong here, but as a rule if it is possible to buy a train with the revenue generated by issuing some amount of shares, then the president may choose among any number of shares that will generate at a minimum the needed revenue (within the limits of issuing rules). That definitely covers Scenario 2.

Now I'm curious about the situation where issuing shares will not be enough as in Scenario 1 but with the corrected 50% president ownership. No amount of shares will generate enough revenue to buy a train, but the maximum revenue is at 2 shares issued. In this case must the company issue all 4 shares and receive 0 revenue?



 
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Tom Lehmann
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stealthychalupa wrote:
So correct me if I am wrong here, but as a rule if it is possible to buy a train with the revenue generated by issuing some amount of shares, then the president may choose among any number of shares that will generate at a minimum the needed revenue (within the limits of issuing rules).

Correct. As several have noted, often (but not always, there are edge cases) the best choice is to generally issue the shares earlier. See the Tip after 6.86.

During face-to-face games, players are often relaxed about letting the President sort out everything and figure out how many shares they "issued" at the start of their operating turn. (See Tip after 6.33 in the GMT rules.)

A UI/UX decision for anyone implementing 1846 is whether to allow a player to revisit a RR's initial issue decision (first step of an operating turn) before ending that RR's turn.

Quote:
No amount of shares will generate enough revenue to buy a train [by issuing alone], but the maximum revenue is at 2 shares issued. In this case must the company issue all 4 shares and receive 0 revenue?

Again, this scenario is not well-specified. Can the President's cash combined with the amount gained from issuing shares do the job? Can the President's stock sales do the job? The requirement (at this point) is *to buy a train* by first issuing shares, then using the President's cash on hand, then by selling stock, as laid out in 6.86, 6.87, and 6.88.

If by raising more cash by issuing fewer shares, the RR *can* buy a train, then the President *must* do so. When it doesn't make a difference, then the President can choose how many shares to issue (once the RR must issue shares).

Fundamentally, I think you are mis-reading "issuing shares up to the normal limit" as a *procedural step*, instead of a *condition* of coming up with the remainder of the cash needed to purchase a train.
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Andrew Lamoureux
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Tom Lehmann wrote:
Fundamentally, I think you are mis-reading "issuing shares up to the normal limit" as a *procedural step*, instead of a *condition* of coming up with the remainder of the cash needed to purchase a train.


Please expand on this. The GMT manual section 6.86 presents the process rather procedurally, I'll try to include quotes:

1) first, seek purchase from another corporation or the bank, using its treasury funds
2) THEN ("...If it is unable to buy a train from another corporation or the bank...") seek purchase from the available trains
3) IF the treasury is insufficient ("using all of its treasury with the remainder coming first from issuing...") THEN issue shares up to the normal limit
4) IF still short, THEN access the president's funds "...and then, if needed, from its President's cash on hand."

Exact specification of what the president can do on step 3 (the original question(s) of this post) determines whether the president can drive the stock to $0, close the company, and protect his personal funds from responsibility in acquiring the train.
 
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Thanks again Tom. I believe I understand now, my confusion of it being procedural came from the line "with the remainder coming *first* from issuing shares up to the normal limit *and then*, if needed, from its President's cash on hand".

Based on the line "the remainder coming *first* from issuing" though, it implies to me that even if there is enough president cash to cover the train buy, the RR must issue to its maximum revenue, before dipping into president cash. Is that correct?

This exercise arose from a new player finding themselves in a bad situation and wanting to explore the use of the issuing during forced purchase to close the company and remove the liability. As I understand it now though, that can only happen if the sum of the maximum revenue generated by issuing plus the president cash plus all allowable president share sales is not enough to cover a train buy. In that case and obviously limited by the rules of issuing, the RR may issue enough shares to bring the market value to 0 thereby closing the company. Is that correct?

 
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Tom Lehmann
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lwerdna wrote:
Exact specification of what the president can do on step 3 (the original question(s) of this post) determines whether the president can drive the stock to $0, close the company, and protect his personal funds from responsibility in acquiring the train.

He can't.

Here is 6.86, line by line:

"Forced Train Purchase: a corporation *must buy a train* if it has none after running its routes (if any) and removing any phased out trains." (emphasis added).

What is unclear? Why are you saying that a RR without a train that can buy one is allowed to ignore this rule stating that it *must* buy one?

This strikes me as an extremely selective reading of the rules.

"If it is unable to buy to buy a train from a train from another corporation or the bank with its treasury funds, it *must buy* a currently available train, of either type, from the bank using all of its treasury with the remainder coming first from issuing shares up to the normal limit (see 6.31 and below) and then, if needed, from its President's cash on hand." (emphasis added)

The rules again states that you *must buy* a train. Then, if you are short money based on the treasury alone, you have to provide the remainder by A) have the RR issuing shares and B) then, if you're still short, getting the money from the President's cash on hand.

This is not saying issue shares up to the max the RR can; it is saying raise the *remainder* (of the money the RR owes) by issuing shares and then going to the President's cash on hand.

Issuing shares and closing the company is neither raising the remainder of the money owed nor buying a train. You're confusing the *means* (issuing shares) with the stated requirements of "buying a train" and "raising the cash to do so".
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J C Lawrence
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That's clear enough. It doesn't recognise the independent agency that company directors are generally assumed to have, but the reasoning and wording is tight.
 
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Tom Lehmann
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stealthychalupa wrote:
Thanks again Tom. I believe I understand now, my confusion of it being procedural came from the line "with the remainder coming *first* from issuing shares up to the normal limit *and then*, if needed, from its President's cash on hand".

Based on the line "the remainder coming *first* from issuing" though, it implies to me that even if there is enough president cash to cover the train buy, the RR must issue to its maximum revenue, before dipping into president cash. Is that correct?

Yes.

Quote:
This exercise arose from a new player finding themselves in a bad situation and wanting to explore the use of the issuing during forced purchase to close the company and remove the liability.

This is not allowed. (see below)

Quote:
As I understand it now though, that can only happen if the sum of the maximum revenue generated by issuing plus the president cash plus all allowable president share sales is not enough to cover a train buy.

Correct.

Quote:
In that case and obviously limited by the rules of issuing, the RR may issue enough shares to bring the market value to 0 thereby closing the company. Is that correct?

Yes.


What *is* allowed is for a player to run a RR into the $0 column, closing it, by some combination of the *President* selling shares during a stock round, having its price go down due to shares in the Stock Market at the end of a stock round, and withholding.

But, if you, say, don't withhold and do pay out (raising its stock price), then -- thematically -- you're considered to be trying to run a viable RR and this RR *must* buy a train if it is at all possible.

Players don't get to A) run a RR as if it was viable and B) turn around and evade their Presidential responsibility to provide it a train by force issuing shares. That's not what 1846 is about.
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Chris Shaffer
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In the event that company treasury + issuing shares + president cash + president share sales is not enough to buy a train, then it's impossible to meet the *must buy* condition.

Can the president in this circumstance issue sufficient shares to close the company? Or is the president required to go bankrupt instead? edit - or is there some other option I'm not seeing?
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Tom Lehmann
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TheCat wrote:
In the event that company treasury + issuing shares + president cash + president share sales is not enough to buy a train, then it's impossible to meet the *must buy* condition.

Can the president in this circumstance issue sufficient shares to close the company?

Yes (as answered in the above post).

(That's why the paragraph that details the force issue share procedure has the last line about closing a corp.)
 
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Tom Lehmann wrote:
stealthychalupa wrote:
Thanks again Tom. I believe I understand now, my confusion of it being procedural came from the line "with the remainder coming *first* from issuing shares up to the normal limit *and then*, if needed, from its President's cash on hand".

Based on the line "the remainder coming *first* from issuing" though, it implies to me that even if there is enough president cash to cover the train buy, the RR must issue to its maximum revenue, before dipping into president cash. Is that correct?

Yes.

Quote:
This exercise arose from a new player finding themselves in a bad situation and wanting to explore the use of the issuing during forced purchase to close the company and remove the liability.

This is not allowed. (see below)

Quote:
As I understand it now though, that can only happen if the sum of the maximum revenue generated by issuing plus the president cash plus all allowable president share sales is not enough to cover a train buy.

Correct.

Quote:
In that case and obviously limited by the rules of issuing, the RR may issue enough shares to bring the market value to 0 thereby closing the company. Is that correct?

Yes.


What *is* allowed is for a player to run a RR into the $0 column, closing it, by some combination of the *President* selling shares during a stock round, having its price go down due to shares in the Stock Market at the end of a stock round, and withholding.

But, if you, say, don't withhold and do pay out (raising its stock price), then -- thematically -- you're considered to be trying to run a viable RR and this RR *must* buy a train if it is at all possible.

Players don't get to A) run a RR as if it was viable and B) turn around and evade their Presidential responsibility to provide it a train by force issuing shares. That's not what 1846 is about.


Couldn't a company have enough shares left to issue (4 maybe) that it could run a train, pay out, then have it's train phase out and be required to buy a new train but unable to afford it and still end up closing due to it's stock hitting zero before the president has to dip into his funds? From reading the rules that seems like it would be ok if fairly unlikely.
 
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amish_rabbi wrote:
Couldn't a company have enough shares left to issue (4 maybe) that it could run a train, pay out, then have it's train phase out and be required to buy a new train but unable to afford it [with its treasury money] and still end up closing due to it's stock hitting zero before the president has to dip into his funds?

No. This is illegal.

The company is allowed to issue shares to raise funds *to buy a train* if possible. If it can buy a train any means (including using the President's cash and selling shares), it *must* do so.

There is no issue shares *step* during this part of the turn; issuing shares is an out-of-normal-sequence activity explicitly to *raise funds* to buy a train.

If you're issuing enough shares to reach the $0 column, then you are raising no money; these shares produce no money.

You're essentially arguing: "I'm allowed to issue shares at this point solely to raise money; so now that allows me to issue enough shares to raise no money."
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Andrew Lamoureux
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Is this an accurate summary?



Where "possible" means there's some arrangement of company treasury, share issues, and president cash that can raise sufficient money for a train purchase.

And "floorable" means that the distance between the $0 position on the stock track and the company's current position on the stock track is less than the amount of shares it's allowed to issue (by 6.31).
 
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Brennan Sheremeto
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Tom Lehmann wrote:
amish_rabbi wrote:
Couldn't a company have enough shares left to issue (4 maybe) that it could run a train, pay out, then have it's train phase out and be required to buy a new train but unable to afford it [with its treasury money] and still end up closing due to it's stock hitting zero before the president has to dip into his funds?

No. This is illegal.

The company is allowed to issue shares to raise funds *to buy a train* if possible. If it can buy a train any means (including using the President's cash and selling shares), it *must* do so.

There is no issue shares *step* during this part of the turn; issuing shares is an out-of-normal-sequence activity explicitly to *raise funds* to buy a train.

If you're issuing enough shares to reach the $0 column, then you are raising no money; these shares produce no money.

You're essentially arguing: "I'm allowed to issue shares at this point solely to raise money; so now that allows me to issue enough shares to raise no money."


So you can only issue shares on a forced train purchase if that will allow you to afford a train AND not close the company? Or is that to mean it can't redeem a share that will net it 0 dollars? That is unclear and seemingly different to what the rules say.

6.86 on a forced train purchase says
"If it is unable to buy a train from another corporation or
the bank with its treasury funds, it must buy a currently available
train, of either type, from the bank using all of its treasury with
the remainder coming first from issuing shares up to the normal
limit (see 6.31 and below) and then, if needed, from its President’s
cash on hand."

but just below that it says
"To issue shares, first shift its stock price one column left for each
share that it will issue. The corporation receives one value lower
than this new stock price for all shares issued. If its stock price
drops to $0, close the corporation"

So it specifically says that share are issued before the president is on the hook AND that issuing shares at this point can close the company.

to me that procedure reads
-It needs to buy a train (this is independent to how it got to the point of needing a train)
-It can't afford one with what it has
-It redeems the shares it has and moves down for each one
-If it hits zero while doing this then it closes
-Company is closed and the president isn't on the hook for the rest.

raising money to raise no money is the argument, but the rules as written do seem to support it.
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Alex Drazen
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Quote:
Raising money to raise no money is the argument, but the rules as written do seem to support it.


I'd concur. To me it looks like the living rules at GMT need an update, at least clarifying under which specific conditions a trainless company subject to a forced train purchase can, in fact, be forced to $0.

If I understand the designer, there are only the following ways to close a company in 1846:

- President sells a share in a SR when the price is at $10; price drops to $0 (Closed).
- Share(s) in market at $10 at the end of a stock round; price drops to $0 (Closed).
- Company withholds when priced at $10; price drops to $0 (Closed).
- Forced train purchase, but only if the company can issue enough shares to drop to $0 and the president cannot raise the funds in any other way.

Another scenario comes to my mind that I don't think Tom covered:

Someone owns 5 shares of a company. Another player owns 2 shares. Company has three shares. Stock is priced at $20. Company that needs a train doesn't have money, but neither does the company president. When the president sells shares, what if they issue enough to drop to $10 (part of the required fund-raising), then sell one share of the operating company (eligible as long as it doesn't transfer ownership)? Or is this considered a "presidency change" to Nobody?

Seems like 6.86 and 6.88 could use a bit of an overhaul.
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Perhaps "as many shares as you can issue" includes not issuing enough to drop the share price to $0 as this isn't allowed during a forced purchase.

So, as many shares as you can issue includes the number in owned - in market - steps to $10.
 
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pilotbob wrote:
Perhaps "as many shares as you can issue" includes not issuing enough to drop the share price to $0 as this isn't allowed during a forced purchase.


6.86 says to close the company if issuing to 0$.

6.86:
"To issue shares, first shift its stock price one column left for each
share that it will issue. The corporation receives one value lower
than this new stock price for all shares issued. If its stock price
drops to $0, close the corporation (see section 8).
"

I thought the purpose of that rule (yellow emphasis) was precisely to dodge the bullet. This is maybe possible only if the president does not have the funds when all has been accounted for...

 
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beginetienne wrote:
pilotbob wrote:
Perhaps "as many shares as you can issue" includes not issuing enough to drop the share price to $0 as this isn't allowed during a forced purchase.


6.86 says to close the company if issuing to 0$.

6.86:
"To issue shares, first shift its stock price one column left for each
share that it will issue. The corporation receives one value lower
than this new stock price for all shares issued. If its stock price
drops to $0, close the corporation (see section 8).
"

I thought the purpose of that rule (yellow emphasis) was precisely to dodge the bullet. This is maybe possible only if the president does not have the funds when all has been accounted for...



I'll have to let Tom answer that, because he seems to make it pretty clear above that's not an option. But, the rules read like it is.
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beginetienne wrote:
The corporation receives one value lower
than this new stock price for all shares issued. If its stock price
drops to $0, close the corporation (see section 8)."

I thought the purpose of that rule was precisely to dodge the bullet.

Incorrect.

Quote:
This is maybe possible only if the president does not have the funds when all has been accounted for...

Correct.

The purpose was to have fewer player bankruptcies in the case where players over-extend with 2 low-cap RRs and get into train trouble. This allows them, in some edge cases, to save one RR and close the other RR *when it is impossible to buy a train to save it*, and continue playing.

But, clearly, this isn't how some players are reading the rules. They are interpreting this -- despite all the rule statements that they *must buy a train* if possible -- as carte blanche to not buy a train and evade their Presidential responsibility to provide a RR one by closing that RR.

Since it *is* an edge case, then screw it. Let's have more player bankruptcies and fewer RR closures.

Strike the last sentence of 6.86: "If its stock price drops to $0, close the corporation (see section 8)."

Replace it with: "This must produce some money; shares that would drop its price below $20 cannot be issued."

Consider this official 1846 errata.
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Tom Lehmann
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alexdrazen wrote:
Another scenario comes to my mind that I don't think Tom covered:

Someone owns 5 shares of a company. Another player owns 2 shares. Company has three shares. Stock is priced at $10. Company that needs a train doesn't have money, but neither does the company president. When the president sells shares, what if [they] sell one share of the operating company (eligible as long as it doesn't transfer ownership)?

You bring up a good edge case.

Insert "or closure of" into the final sentence of the first paragraph of 6.88 so that it reads:

"The President may sell any shares, subject to the normal restrictions, except shares that would cause a Presidency change in or closure of the corporation currently operating."

Consider this official 1846 errata.
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