Constituency statutes, Intel

Welcome to shareholder Primacy from freeflow media. A podcast about activist investing Securities Law and all the way is the financial and legal world's intersect and Collide in real life and Lipton. And I are back again after a break. And of course, there's a law professor at the University of Colorado, who teaches and research and securities and business law, she holds up the legal end of our podcast and that's Mike Levin an activist investor who lives in Works in Chicago. He covers the financial side of our podcast. Yeah, I should say in the intros that University of Colorado at Boulder because you live in Boulder. Now know, I live right outside, there's very expensive, right? Outside of Boulder, which is sort of Denver. Anyway, so we're back. We want to say to our followers and fans, thanks for indulging, our break, we had a very nice at least I did, I don't know what you did and, you know, you kind of finish moving up started teaching, oh you When did class start this week? Yes. Class started this week. Exactly. Oh man, everyone. So see, new set of students new set of everything. Yeah, figuring out. New classroom Tech. They have actual blackboards like real chalk on blackboards blackboards, which is very exciting for me. I feel like in Little House on the Prairie. Oh, wow, none of these electronic kind of like well, so whiteboards like it, you know, a lot of most schools that have whiteboards. Now, you know, like with Mark. Oh, so this is like, actual chalkboards I love it. Oh, are they new buildings with just old technology that new buildings? Like, I guess somebody aesthetically like the chalkboard look, which I am. I very much approve. And then when you're done, the students just take pictures of what was on the board right now. I erase it. Oh, I see that. Right, cool. Well, so welcome back everybody quick. Reminder, we have our mailbag. Um, that we want and we're going to cover that a little later today. This morning, just shareholder Primacy one word at freefloat LLC. Please send us questions, comments, suggestions, love and hate. So that's a quick reminder there. But anyway, let's dig into it. We have a couple of fascinating subjects. One was motivated by one of those Malbec questions about constituencies constituency statutes. Sorry, easy for you to say and those are in some US states and also Canada will dig into that. And then the main event will be talking about Intel, our favorite troubled chip Fab Company and their 10% stake, that they gave up to the US government or US Treasury. So let's let's dig into that. Let's talk about constituency Joanne. Okay. I'm gonna read the question and question came from a follower. I think it was a law student the student. Yeah, in Canada. Who asks, do you think the presence of a constituency, statute, editors note will Define that for everyone in a minute meaningfully changes how the directors of a Canadian issue were or American issue or domiciled in a constituency, statute State might approach its duties. Particularly when many of the corporations shareholders presumably are Diversified portfolio holders. So first can we quickly help me what's a constituency statute it's a statute that explicitly says corporate directors. Don't have to favor stockholders exclusively so they say that corporate directors can take the interests of employees or customers or, you know, the community into account when they're making corporate decisions Delaware. Notably does not have such a statute in Delaware by common law. Director's fiduciary obligation is to maximize shareholder wealth and prioritize shareholders, but some states have changed it up by Statute. So there are, there are some US states and we're going to bring this to Canada and also Canadian either provincial law, right? That says that explicitly allows or encourages. But not really require. I don't usually not necessarily required because it's a bunch of different interests. So it's something like directors are free to take these interests into it is usually okay, but their phase different ways, okay? And so that's that's in contrast with Statutory or case or law, that either emphasizes a requires wealth maximization. Exactly. Okay. So that's that's kind of the contrast. So then the question is, does just having to just being in a state or in case of a Canadian company a country. Where you're allowed to do this, how does that change? How you approach your your duties and, you know, maybe generally and then if you're a diversified big Index Fund what I mean, I'm thinking of this, in terms of the corporate issue or that has Diversified fund, you know that maybe has Diversified fund holders because we talked last time we talked about Paramount that was yes, two times. I don't know whenever it was mentioned, Diversified Cheryl's, may have different preferences than a shuffled. It was like invest in just one company. But okay, so with the caveat that I don't know anything. About Canadian corporate law but I'm just tackling this from kind of 50,000 foot level. Yes, from my perspective, one of the most important things about corporate law, which is actually the part that makes it interesting and fun for me is that there is a disjunction between the formal obligations that are imposed on directors. Say, like you have these fiduciary obligations, here's what the court says right here, care and loyalty or something. Yeah, exactly, yes, right. And how those Duties are actually enforced. So, we know in Delaware, Corporate directors, have a fiduciary duty to maximize. Well, lots of cases say that, but outside of a few, very specific scenarios that Duty can't be enforced in a lawsuit and yet, directors, do usually act to maximize shareholder wealth. Why? Because of corporate structure only the shareholders vote because in a public company activists can come in like you and say, hey, you're not maximizing. Charlotte which means what matters really isn't. The fact that directors formerly have this legal duty to As well, what matters is who exercises power in the company, but it also means if the shareholders who exercise power are Diversified, and if they care about issues, like say climate change directors are going to respond to that regardless of what their fiduciary obligations are. So that's my reaction to the question. If Canadian directors have a Duty or even just the freedom to consider non shareholders, how is that reflected in the corporate structure can stakeholders sued to enforce these duties? If not what are the Avenues for stakeholders to exercise power? If the only ones who exercise power the shareholders then I think directors at the end are still going to do what shareholders want and if shareholders generally want more consideration of stakeholders, that's what they'll get and if not. So in America and I assume everywhere, the formal content of fiduciary, obligation isn't what's doing the work? I mean, what does the work is who has the power? okay, so the answer here, is sort of know then, yes, yes, that know that the statue, the statutory obligation per se, It does not necessarily. Lead to this behavior of how you approach your duties but it's, it's the whole and maybe it helps like set a tone or says there might be like, well, is the things. So, I'm a lawyer and like, you know, sociologists do a lot about organizational behavioral culture and how culture sets tones and, and I believe all that's real, but I'm, it's not my field. So I can, you know, from a legal perspective, I just tend to put it inside. So you could say, you read about people not legal advice. You're gonna say this is not. This is not sociological exactly. So so but on the other hand there could be kind of Behavioral which verges into what I think more about. You know the economics and so forth factors that lead to that because of as our questioner asks who the Diversified investors might be. So that that's what kind of leads to which is actually that and that seems very sensible to. A person like me that I want the incentives and the behaviors to drive. What people do rather than you know the pure legal. Yeah. Require I want those. I mean because I'm an economist now a lawyer I want I want the legal a structure to kind of reflect, you know, what's going to be best for everybody rather than The other way around, right? Right, I'm not sure that really goes. That is an accurate. I like, I think actually, there are structural problems. If we talk about everybody, it rather than just shareholders. But I think is a really well designed to benefit shareholders. We kind of solve that problem. Yes, all right. So so the answer is probably not or no, but there are other factors possibly drawing on the constituency statutes that could then lead to the corporations, doing what the Diversified or index funds or whatever, want them to do. Okay, cool. I think that's a, that's, that's pretty good. Hopefully that, that answers that question. That was that was mailbag for the day so everybody send more. We have a couple in reserve but we need more so please send them along and let's talk about the main event and that was the main event of the last couple weeks, which was the US government taking 10% of Intel of California. Until of course, is this troubled. Chip manufacturer that needed sort of a boost from the US government. I can summarize a couple of the really Salient facts. Intel has been really dogging it for quite a while they and it's not just like AI chips were, Nvidia is dominant so forth and Intel's had problems for quite some time. And they're kind of, you know, there's still, you know, making money and so forth but they're not, they're a shadow of what they're used to be when we used to call them win. Tell you know, when there was this kind of you know computer dominance, you know they really didn't get in a Mobility very well and so forth anyway. So As with Intel is symbolic of it. But not the only problem, the US passed the chips act last year. And as part of the chips act, the US was prepared to basically hand over 10 billion dollars in. I would call it a grant, to Intel to help with investment and create jobs in the US. There's there's, you know, this happens all the time, it happens at the state level, happens at the local level where some governmental body decide to rescue a job, creating company in exchange for, you know, basically promises sometimes. Vague promises. Sometimes, very specific promises to make these investments in infrastructure in, you know, creating a Workforce and so forth. So that was sort of the background and intel was just kind of, you know, going to probably March ahead except the 10 billion dollars make the investment and try to turn their business around. But then something happened. I don't know whether president Trump got the idea on his own or whether someone Nelson. Pelts, one of his friends was whispering in his ear and you know, Intel has been the subject of a little bit of his over the years. Not anything too cute. um, And somebody said, you know, you ought to get more either. Somebody sat here, it occurred to president Trump on his own. You ought to get more than just a bunch of jobs. All right, so in a and I didn't read, there's been a couple of really great accounts. So Wall Street Journal had a really, really good kind of play-by-play tiktok of how this happened, how this went down and how the CEO kind of saved his job. And, you know, there's also just social media where, you know, for one moment you know, down and jump was crapping all over the hands and after after they closed this deal, you're saying his loyal to China and not the right. Exactly. There was gonna be an investigation that he was committing industrial espionage. And then, you know, the next week is, oh, man, he's an American Hero. but that all revolved around a what amounts to Intel. I don't know if it's granting. I don't know what they're a verb would be, but, but conveying 10% of its common shares. 9.9%, nine. Point nine. Sorry. Okay, Um, to the US government. I thought it was to the treasury, but I think you said the Commerce, it's Department of Commerce, Department of Commerce, is the is the record holder? Yeah. Of the company books of this of this, almost 10% of shares and that was basically in consideration for the funding. Yep, I think. So it, you know, if, if you weren't like paying close attention to the politics, you would view this as an invest as an investment of 10 billion dollars. In exchange, for 10% is shares, which value of the company at about 100 billion, which I think was pretty close to. What is a little bit? Love, they're getting a slight discount. Yeah, right. But you know, it wasn't like this unbelievably sweet, heart deal, and the company and the company, the US government, our company didn't overpay. So, so that's kind of the facts on the ground. I don't think I missed anything really significant there. Did I Know, all right. Good. But there's been all sorts of really interesting debate about what. In fact actually happened here like from a Security's line and a corporate governance and an investment perspective and that's I think what we would like to delve into a little bit here. I is that, right? So Let's first talk about the share the share. There's a share sale agreement, right? Yes, there's I don't know what it's entitled, there's a contract. What, what's in that contract? An okay, so, okay, as you said, he intel was previously slated to get these grants, but to be specific, was actually two separate segments. One was called the direct funding agreement and that required Intel to get to invest in very specific plants and particular States, like Ohio and Arizona and it was going to investors plants and build them out. That was the direct funding agreement and then separately, there was another pot of funding called the secure Enclave agreement, where intel was going to manufacture chips in the US, that they'd be available for National Security. So it was actually these two separate pots of money. And intel was slated to receive that money. It had a contract with the Biden Administration, it was going to get this money. And now under this new agreement, as you say gets the exact same money, but it has to give up 9.9% of its stock. Um, now in this contract it says Intel has the exact same obligations that always had under the secure Enclave agreement, which is the National Security piece but under the direct funding agreement, the one that's about investing in particular, plants in the US, the new agreement says, with this grant Intel is released from further obligations under that agreement. Now, I don't know, like, I haven't been able to tell whether that really means that Intel is like not doesn't have to upgrade those facilities or do whatever or whether it pretty much was going to do that anyway. And this is just clean up. Like, I actually can't tell I know that Intel hadn't finished, making whatever Investments it was going to make. So I just don't know like, what the impact of that is. But definitely the it says that Intel is now released from all obligations under the direct funding agreement. Anyway, so the US pays the Intel, the same amount of money and now because the stock that's priced at 20 bucks per share, which is just like a little bit below, like, where it was valued. And there's a voting agreement, the Department of Commerce has to vote with the Intel board unless the matter specifically concerns this agreement or Intel's relationship with the government. So if Intel's board proposes we should renounce, this agreement Commerce gets to vote against the board there, but otherwise Commerce has to vote with Intel's board and commerce can sell the stock that it gets, but it can't do it before August 26th 2026. So, like, that's the date that the stock is released for sale and if itself it has a stance, there's a standstill. Yeah, there's this. But if it sells, it has to do. So in a broadly syndicated offering, they obviously don't want Commerce placing it with an one big block with an activist. And finally Intel has this Foundry segment and you probably know more about it and I do, but apparently, it does manufacturing for outside customers and there's been a lot of debate about whether it's useful, Intel. So they're mostly with some risk that it was going to get rid of this segment. So the agreement says, yeah, that if within the next five years and tells more than 49% of that business, the US gets to buy another 5% more of Intel stock at the same price 20 dollars per share. So that's basically the agreement itself. So, let's talk for a minute about the voting agreement, just to make sure we've covered that. So, The US government owner, Howard lutnick, maybe is that he holds the proxy, I don't know. He's the he's the Secretary of Commerce. So there they agreed to vote on all Board recommended matters. So, like they're gonna vote for all the Intel director nominees and there's a shareholder proposal. They're going to show you. Okay. Yeah. So there's so that's a fairly customary voting agreement. And again, the are the US government. The owner is locked up for a year on this term. So, so, we'll sort of see what happens. So, is there any Sunset to this? Is there any like, so the US government could be a 10% owner Intel for the next five? Ten, fifteen years? Yeah. I I don't think there's, I don't think I've ever expires, it's just about if and when they sell. Okay, interesting. All right. So what's A couple of these things just blow me away but what was you? What what are weird or odd or what's what's crazy about this for you? Well, I mean obviously we just did the whole premise for the US is taking stake in a private company and and also the idea that there was a grant they were supposed to just get a grant and now suddenly the Trump Administration is changing the deal and saying okay you get the grandpa Only If You Give a stock unilaterally there was a grant with like there was a act there was active Congress and just changed it. So like leaving that aside. I mean like you know, we haven't seen us take stakes in private companies, outside of like emergency situations like the financial crisis. So the agreement comes with all these risk warnings about the business aspects but also the legal risks of this kind of contract. Like it might just go up in smoke. If the government changes its policy and it might turn out to be unenforceable which seriously like think about how do you enforce this suppose despite the voting agreement Commerce votes against Intel's bored. What can tell do? The agreement itself requires any claims be brought in the District of Columbia or the Federal claims, so it's not going to Chancery. Do you think the course is not going to Federal District Court? Well, yeah, it could go to the District of Columbia, the court of federal claims, but which is different, which is different than, yeah. Okay, yeah. Okay, they'll be. Um, but like, they'll be like statue requirement and I'm don't know. Enough about jurisdiction of these matters to be able to say which one is the left, but I do we What you an injunction requiring Commerce to both the shares particular way? I have no idea, so that's one thing. And then there's the escrow. Remember, there are these two separate pots of money here, the direct funding agreement and the secure Enclave agreement for the secure Enclave. Agreement Intel said it's going to put the shares in escrow and release them incrementally as the funding comes in. So for the secure on clave agreement, funding is going to come in over time and until it's going to release the shares over time. But the whole Arrangement only lasts while Intel is eligible for secure Enclave funding. I'm not exactly sure how long that is but it might be like 10 years or something once that period ends. So Intel is no longer eligible for the secure Enclave, funding. If the government hasn't paid what's due, it's still gets half the shares and escrow, no question that gets happy. So theoretically the government could just not dispersed anything. Wait, it out and get half the shares. Anyway, Oh, and that would be something that wouldn't shock me. If the administration pulled some I had not like that. Right? But the final thing and this was just reported this morning, it's not in the agreement. But it's, it was reported this morning that Intel had been donating money to a historically, black educational, HPC is right that a law school and essentially to create a diverse pipeline of lawyers that it could then higher, and it's stopped that funding. Now, that's not in the agreement, but you do have to wonder whether they did it. As part of the agreement, nonetheless, I would well, yeah, there might be some sort of kind of winking or not understanding that this is this is a way for This 10% shareholder to kind of influence a little bit of sort of sort of an sort of an anti woke anti-esg. Yeah effort, you know sort of Sort of more significant version of that. Yeah, so wow. All right. So yeah I mean what I I was actually not completely taken aback. I mean by that this happening and I was as an investor and again I'm not I used to own Intel on time ago, I don't anymore. I was. A little reassured, I suppose that there was like a voting agreement and so forth that, you know, that they thought enough about this to, you know, paper it up a little more and and the papering up, looks starts to look a little like, what other, yeah, you know, 10% Investments might look like in a company. You know, this, this is, this is kind of like a pipe when you think about it, okay. And it looks a little like, you know, other pipe terms, you know, with you know, commitments to support the board and so forth, right? Um, But you know what? I was worried about and we're going to talk about that a little more a little later maybe after the break was what some of the other kind of influences would look like, you know, this was not merely You know, some sort of equity analyst deep buried in Commerce said, hey you know, we had to invest 10% in this chipmaker. This is, you know, and we're going to make a decent risk or just return on the free cash flow and so forth. This was You know, our president saying, you know, I I I'm we're gonna give these people 10 billion dollars we should get more than just jobs. We you know, and again it was very, very transactional in that way. Yeah. Um and so I kind of worry about it that Bernie Sanders and Elizabeth Warren did want Equity when the chips. Oh yeah, this isn't the first time this is, but there was rejected. Oh interesting. All right, so so that was that was some of what I was. I was kind of wondering or maybe concerned or surprised by was was how the federal government would view, this kind of sort of investment and what what it was going to get out of it again, other than jobs, most of the time. This happens. It's for job creation. Yeah, exactly. But there's, there's more to it. I think in this one then just that. Anyway, there are some other really cool questions we can cover, I suggest Let's take a quick break. Okay? And then we can return to some of those and then talk about some of the more broader investment thesis implications for for this investment, how about we do that? Okay, sounds good. All right, let's do that and we will return to Intel momentarily here at shareholder Primacy. Shareholder Primacy is brought to you by free flow analytics.com. The only free database of corporate directors, their influence and their performance. If you own a Stocker, retirement plan go to freeflow analytics.com. And look up which of your elected directors are performing well and which aren't use your vote in the alternative democracy and get your data at free flow. Analytics.com. Now, back to the show, The Primacy I'm an lifting here with Mike Levin. So we were talking about Intel and this I have a couple more questions that we should try to cover the 10% of the shares were just kind of. I said this was a pipe. Yes it so there wasn't any kind of shower. What kind of what kind of a provable process is this? Have to go through or shoulders can sort of bless this or maybe not. What's the what's going on? So this is really yeah. So like you know, I was I am very much on social media, probably too much. So and this was constantly coming up even from lawyers, just like not governance. Lawyers, don't understand corporate, law works. So the fact is no, it does not require any shareholder approval, that's normal. Oh so the charter of every company authorized is the maximum number of shares that can issue. And as long as the board stays below that maximum number, they can decide when To issue shares and on what terms to issue shares, they only need a shareholder vote legally to authorize it. In very specific scenarios that the exchange is required. So under state law, it's a listing requirements. Yes under state law. There's no requirement of shareholder approval to issue, shares. As long as you're below the maximum under Federal exchange listing rules, sometimes you need approval for very specific. Share issuances. Like, if you're going to issue more than 20% of your stock, that's a net. I think that's a NASDAQ rule, both, right? If you're going to issue more than 20%, you need your old approval. And as we talked about in the context of test Tesla, if you're going to have a new Equity compensation plan for your directors and officers, then you reach your older people. But just send Place 10th percent with an investor, any investor. This is a board decision and even even if it's the even if it's a federal government. Yes. You know. You know, I mean and there are probably I haven't talked to Intel or lose. There are many that are probably many a few at least that are deeply upset. Not only did Intel Intel, I'm sure they're probably happy for the 10 billion into Intel needed the money. But there was supposed to get it anyway, right? Yeah, they were supposed to get anywhere and so giving this up to, you know, Howard lawn and Donald Trump in the Department of Commerce, in this government, probably upset them. So they're probably wondering why didn't I have any say exactly because you don't just you wouldn't. Um, and so there's really no no actionable item. I mean, you can't sue somebody but I don't know how far you get well, exactly. I mean, like I just you know Delaware and intelligent Delaware. Delaware draws a distinction between like, what you are, statutorily authorized to do and then what would be a breach of fiduciary duties? Do like the board has discretion to place 10% of the shows? However, it wants to whether it complied with its fiduciary obligations, when exercising that discretion is a different question. So that's the second. Like, that's the next step like okay fine. They are legally allowed to just issue shares. But did they comply with their Do Sherry obligations and doing so because what they certainly couldn't do is just give 10% of the shares to someone for free and just say here, God bless. I want to hand, you 10%. All right? Yes, gifting or something? Yeah, waste, that would be reach, a fiduciary duty. So we saw lots of people like, saying, how can they just give it because they were supposed to get the money anyway. Um, but here's the thing in, from another point of view, they didn't just give it away. So first of all, they got that lift of obligations for the direct funding agreement. And I'm genuinely not sure whether that's any substantive. Release of obligation matters. But but the other thing is, yes, they were supposed to get the money regardless, but the reality was, the Trump Administration was withholding it if you could see If you go back to their SEC filings like for the last couple filings, they actually said we've met the requirements, but we have no idea whether we'll actually gonna get the money. Oh, so they were like any, any academic, but any other Grandy was just kind of waiting and waiting, and we hope we need to go. So, alright, be Intel, could have Sued, I don't know. But that would have taken a very long time. The outcome wasn't certain, they would piss off the Trump Administration which you know was particularly vengeful. I wanted to do that, right? I think from Or shareholder welfare perspective. It's at least reasonable to think that the easiest path was just to agree to give up the stock and get the money generally, a little temperate, little 10% dilution in exchange for this and, you know, like the situation. Yeah, it's just like the situation we got universities in now, right, and that they're supposed to get these grants, but the litigation is longer than uncertain, and it's easier to just settle. And I've seen some suggest, this was all a new mention this that this is the way of saving the CEO's job that this is all, just like a conflicted transaction to save this eios job, but even if you view it that way, he's just one member of the board. And if the other board members approved, they're not conflicted and so that's majority independent board approval. It's it cleanses all the conflicts, plus, you can see some other benefits to Intel. So, one of them is just well. Now, they've got essentially a powerful Champion, the US government wants to see them profit in the US government, has a lot of, they kind of did before they kind of did before, you know, Commerce would normally be a cheerleader for This kind of stuff. And but, you know, they really now, they got a really got a real, real motivated investor. Here you mentioned Intel, the target of some activism, so So from their perspective, this is kind of like an activist event defense. I mean you can think of this as like, first of all there's this soft version of it, which is no activists. Just want to, like, Buck gonna want to Buck the Trump Administration, but then, even if someone did 10% of the votes, are locked up. Oh yeah. No, yeah. If I was an activist looking at Intel, now I, I would count, you know, and I haven't looked lately but intel was not, you know, very well held by the Insiders and he was I think it was three or four percent, I can't remember. It was decent, but not other huge companies but now there's like, you know, 10 15% is held by insiders that's like that's a huge barrier to any kind of, you know, activists work at a company of this size. Yeah. And so then, On the head. Like the next question which is, is it a breach of Duty to essentially write a little activist defense, like by handing over 10% of the company? I, I wish it were. Yeah, because if you Normally that's just an ordinary business transaction, but if you distribute chairs for a takeover defense, like in the context of a poison pill, that actually would get heightened scrutiny. If it's if someone sees over it. But Delaware is said just because a share sale also happens to have the collateral effect of protecting against activists doesn't mean that every single Sheriff sale is treated as a takeover defense. If the main reason of the sale is to sell the shares. That's just an ordinary business decision. And that's really what this looks like, but I do want to mention with the voting agreement. I mean, you said it's pretty standard because on the one hand you can see I mean, no one wants to hand 10% of the stock over to someone who might then vote them out of office so they don't know. What does that? Nobody? No, no board. Settles one of these things. Yes, exactly. Without only only to give only to give the shareholder free reigned opposed him anyway, but but what they could have done though is instead of saying Commerce has to vote with the board. They could have done it as a mirror voting. So that it's not so much. The Commerce says to vote with the board Commerce has to vote the exact same way that other shareholders vote that way. So that like if the shareholders vote 730 in favor of something, then Commerce would vote 70/30 in favor and that way and that would be a completely neutral thing. Like we're selling shares to Commerce or giving shares to Commerce but we're completely neutral on activism. So was it really necessary to sneak in this kind of activist events? But Still 10% is just not big in the grand scheme of these things and I just don't think a court would really look at and then that neutrality term is much less common. Yeah, most recent is it because if you can get the defense, why wouldn't right, but there's something there would there would be some sort of a logic to that because if, you know, we're not talking about, you know, some sort of Sharky hedge fund or something like that or PE firm. We're talking about the federal government. We're talking about this fun representing 350 million taxpayers. It should say this because this again, like on social media because I'm on Blue Sky. It's very Lefty space. And people were up in arms about this and can shareholders Sue. Like, I don't think they're going to be successful, but what they could do is seek books and Records to sort of see that what happened here you could, if you worship until you probably could ask for this. Now, of course, Delaware changed its law. You'd be very unlikely to get like emails and the good stuff and probably I assume the board materials are pretty. Like heavily. But but There's a nugget. Journalist instead during a fight that's the thing. That's the next Frontier for journalists instead of four years ago by your shares. Doc yeah baby. You have to you have to demonstrate shareholder purpose. And unfortunately, invest because I have a story to write. Anyway, um, all right, so there's some interesting kind of broader kind of investment oriented yeah like from an investor. So that's like the how I think of this legally. How do you think of this as an investor it? At the same time as I hinted before, it kind of bothers me but it doesn't and and and the it doesn't bother me again. Intel needs the money. And and no saying investor. Is going to invest, you know, 10 billion dollars in a pipe without getting some for it, right? Okay, whether 10% was fair. whether you know the us, whether Intel couldn't negotiate, it harder, And you know, gotten it down to seven. I don't know how much negotiation happened here. That's one of the subjects of the 2:20 demand that we're going. Yeah. Um, But you know, it's you know, this, you know, pipes are pretty standard, you know, the idea that it's a federal government on the other side of it is pretty unconventional. And again, this is The common, you know, Berkshire does this with some frequency? You know, take control company that's that's, you know, has some, some fairly desperate needs as the liquidity, the federal government certainly has the liquidity to do this. I mean, they're the ultimate source of liquidity. They could, they could have printed the 10 billion dollars, it'd have to go, you know, track it down. They didn't have to go cash in some sort of investment in order to create the money. Okay? Furthermore, there's been lots of other bailouts, you know, the government bailed out, the Auto industry. Like, what? I understand it was a little different that was in the form of death. That was not, they were supposed to get the money anyway. Yeah, this is true. So but yeah, so it was sort of about and again, you know, I would love to know, you know, in the boardroom, you know, they're getting ready. Okay, where's my money? You just a little while you said, you know, their kind of waiting on the funding. And then there's saying, okay, we're about to get the funding but we have to give up. 10% what where that come from, you know, that would have been a really interesting moment. In in the boardroom. So anyway, so the idea of a bailout or of this kind of investment, you know, doesn't I mean, troubles me a little bit. I wish they didn't need it. And I, you know, I would want them to have negotiated this, you know, as hard as they could have. But again, there may have been limits to that too, you know. Again, you know, we're dealing with a counterparty here that I think from a negotiating standpoints pretty irrational and it was and you know, there's no predicting. Yeah, you know what and normally if you're negotiating a pipe, you know you don't have to worry. If the negotiation goat South that you're going to end up all over truth social and you know with this CEO even deeper crap than they were before, right? But anyway, so that's those are a couple comments now. let's talk about the The counterparty here, you know, this investor normally if this, like I said it was Berkshire, even if you know, I wouldn't initially worried. I but, you know, the counterparty here is uniquely weird. Okay. You know, again, as we said earlier there wasn't some Equity analyst In a back room saying this is a good you know, I've looked at cash flows and this is a good idea. Okay. This is um you know, are the US president and potentially some of his advisors are saying what can we get out of this? Maybe not, maybe they were just saying we should get more than just jobs or maybe they were saying, you know, we need, you know, I've been thinking a lot about Intel and their Dei programs on the way out or I've been thinking about where they invest, should they be building a plant in Texas or in Alabama some place where The president would like to do someone a favor. Okay, you know, I I'm concerned about the kind of metaling yeah, that this investor would do that has nothing to do with improving cash flows and raising the show, right? Okay, there's no share price trigger. Here. There's nothing. There was that one little component about The Foundry business but there's nothing about how the federal government is trying to make money off of its 10%. Yeah, I'm highly confident. They did not analyze what this is going to look like in five years. Okay. Yeah. So, therefore, you know, five years, I mean, there was, you know, there was a, I think the New York Times had the headline, you know, Trump is the new activists, yes, I saw that. Yes. and, It totally made me cringe because you know most active, you know, the things I work on are trying to create value for a company. He was just trying to, you know, potentially create trouble. Yeah. So the other thing that I was kind of wondering about is that you know, the Intel, you know, already does. I mean they sell it actually, but most of their assets are in the US. okay, if something, I think they have some plans overseas, but, you know, and all the Investments that they do are here okay, so there's very little additional you know, marginal additional Investing that could do that's going to be a creative that is going to kind of satisfy this investor. So you know, the one hand 10% not going to, you know, it's enough to kind of thwart, you know, routine activist stuff. But it's not going to be enough to kind of dominate, you know, some very shareholder vote. Well, but it does it, you know? And again, the voting, what was gratifying, gratifying, what was good is that this 10% didn't get, you know, how we're a lot like, on the board. That sometimes happens, you know, in exchange for a 10% stake, you know, it didn't give him like, you know, a board Observer rights. You know, it's just so there's some things where into and I don't know if this came up, you know, my guess is that Trump basically said just, let's get something for this more than just. Yeah, so, you know, Intel may have said, well, what do you think about 10%? Let's take 5% off the show, right? This is your shares, and that's it. So, You know, my kids I don't have a lot as an investor, I would have very specific concerns but there's there's so many different ways. This can go south. Yeah for Intel that are so unpredictable. So you know at some point you know, if the sooner they can redeem this the better. How does that? So, you do not want this activist, you know, hanging around, you know, any longer than than you absolutely need. So basically, they'll be really happy after 2026 when the Commerce can sell when it's time. Yeah, when Commerce Gonzalez Stakes. So hopefully, hopefully, they've, you know, got a 20% share price bump. You know, things were covered. They unlock the key to AI chips. And in a year and a half, you know, Commerce has moved on or maybe, you know, president short attention span is his helped him to migrate to some new subject. Anyway. So that's the, that's the, that's the invest some observations about this from the investors team point. So Um, anyway, well, that was kind of fun. I, you know, I had followed some of the Intel story but was kind of eager to hear some of the legal perspective that I knew that you're could really, really kind of penetrate shall we, shall we? Conclude make sure. All right, let's do that. Thanks an talking, it's great. Talking about all this stuff. Always, we will continue with this at some point. We'll sort of see in a year, whether we've Had the investment works out. We're back with the series of podcasts from for the fall. So please stay tuned here at shoulder Primacy hosted by and Lipton and me Mike Levin. I'm an independent activist investor and advisor to investors about their activist situations and is the professor of law of the Lawrence woth chair of Business Law at the University of Colorado law school at Boulder. Remember, it's in Boulder. You can find me Mike at the activist investor.com. And Anne asked one word dot colorado.edu. Our podcast is produced distributed by free float media. Thanks for listening and we'll talk again soon.