PPRuNe Forums - View Single Post - airberlin announces new turnaround measures
Old 13th Nov 2014, 17:01
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racedo
 
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Typically the people lending money to a company and people who own the shares as a long term investment have very different interests. What is good for the lender is sometimes very different to what the share investor wants to see. It can sometimes be a bad idea if these 2 perspectives get confused.

In many countries, there are strict laws that prohibit a bank from both providing large loans and also owning a significant proportion of the shares of a company. The aim is to try to prevent a conflict of interest.
You make a good point. If a Minority shareholder is the one who keeps lending money to a company to keep them afloat. After a while they acting as a majority shareholder which is contrary to law.

I think this will become an issue if they keep bailing them out as they will be in defacto control because refusing to put in cash until management do something is control.
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