When we were young lads of 12 and 13, we learned a few things about business in mathematics. Many of our dads would do silly things like invest in companies like Sea Diamonds. One of the things we learned was about 'underwriting'. Underwriting is first and foremost a financial transaction. At the end of an underwriting, money always changes hands. Either a person pays a risk premium, or another person is given the value of something less the risk premium. When you buy insurance, you pay the risk premium. When you go to an underwriter with a share issue, the underwriter pays you the cash for the shares less the risk premium. The standard rate for stock underwritings is 20%. If this is so, CIBC should have given KGI about $48,000,000 or so. Where's the money?

After that, the underwriter goes to the stock market with the shares. If the underwriter is lucky, they make 20% or more, but often in floats or IPOs the shares goes down (take Facebook for example) and the underwriter could be stuck with the shares they cannot sell except for an egregious loss. Hence the risk premium. The risk is calculated to cover the spread of likely prices the underwriter will get for the shares at the float.

Now in a private placement, there is no fluctuation in the price of the shares. CIBC has not given KGI the money,and neither do the need to because the $1000 units are being sold to accredited investors at a rate of 7.5% interest.

How on earth is KGI going to pay  the 7.5% on the convertible debentures when it is not even paying dividends or making a profit? I do not think such an arrangement would even be remotely in the interests of the shareholders of CIBC.

Furthermore, the alleged convertible debentures have a conversion at $13.00. Why would I not go for the current market value, as WELL as the 7.5%? Since the 'underwriting' was announced, KGI shares have fallen further. If I were a financier, I would screw KGI to the wall, as a company like this would be desperate for financing.

The problem with KGI is the issuance of unsubstantiable press releases which are an insult to the intelligence of a 12-year-old, and the executive salaries which are grotesque.