I'm reading posts that say the common holders get zero. Obviously they get zero in distribution. But no one can take away their stock either. They own over 200 million shares. After all of the debts get paid, some will have to be paid in stock, or warrants. This is not a liquidation, the company will continue in business. The debt paid in shares will increase the shares, but they will have a value. You guys can now try to figure that value with the increase in shares outstanding. For example, if they issue a billion shares for the debt then the outstanding would be 1.2 billion shares in a company with no, or little debt, no pension overhang, etc. If that company is now worth $1.2 billion then the stock trades to $1.00. So I don't get all this talk about the shares being worthless. They will have a value in a continuing business but they will not receive any distribution of any assets at this time.
It is so refrshing to find somebody on this MB who knows what they are talking about and is willing to push back against the ignorant masses.
"Ambac Reminds Investors That Its Common Stock Will Be Cancelled upon Emergence from Bankruptcy
by Business Wirevia The Motley Fool Mar 27th 2013 5:06PM
Ambac Reminds Investors That Its Common Stock Will Be Cancelled upon Emergence from Bankruptcy
NEW YORK--(BUSINESS WIRE)-- Ambac Financial Group, Inc. ("Ambac") (ticker symbol: ABKFQ) seeks to remind investors, as previously reported, including on page 4 and elsewhere in Ambac's Annual Report on Form 10-K for the year ended December 31, 2012, that our Fifth Amended Plan of Reorganization, which was confirmed by the United States Bankruptcy Court for the Southern District of New York on March 14, 2012, provides for our common stock to be cancelled. Accordingly, holders of our common stock will not receive any distribution with respect to, or be able to recover any portion of, their investment in such securities. As such, all of our currently outstanding equity securities will be cancelled and have no value upon our emergence from bankruptcy."
Generally, if a company re-issues new stock, the old is first cancelled. Will there be warrants for conversion?
I would hope so. Another avenue is to not cancel and just issue more commons diluting the current holders value. We shall see soon enough.
Not true. I don't recall any company cancelling their common stock. You can dilute it with shares being issued but you can't just cancel shares. It's not really a choice. Shareholders do have rights. The value of the common will change, up or down, depending on what's issued going forward. As a matter of fact BK judges sometimes try to create more value for common then they deserve.