Well, the non-cash interest is simply about the fact that their bank agreement doesn't let them buyback stock, or pay dividends to common or preferred. So the only way they could buyback the preferred, is by using debt that pays interest in more debt, and would be functionally subordinate to the company's primary debt.
They've done some very clever things lately, with Zell, and all. Things that are incredibly "accretive" to value for common holders. Quite frankly, I remain utterly enthralled by it all...and what it likely means to my financial future.