While the preferreds are not paying and went through a nasty exchange, if they ever want to sell the company or pay a real dividend then these are worth a fortune. I am sure they would rather buy them back for 12 then to go through even more lawsuits over the dividend and it will be very additive for the company's book value/share holder equity.
At $1.25 on a $25 face these could easily hit $10. These are trading at the same price as Fannie Mae and Freddie Mac Preferred shares which clearly have no value as the company is paying all profits to the government. Look at some of the bank preferreds which arent paying they are trading in the high teens.
I just listened to the whole conference call again inlcduing questions and there was nothing new said about preferreds.
(1) they are at present not inhibited from paying dividends on common even if they donlt pay dividends on preferreds.
(2)The dividends on preferreds are suspended indefinitely
(3) If the compnay was ever liquidated, preferreds would still befirst in line to received $25/share or however much the assets stretched to, before common got anything.
(4) Nothing prevents management asking for a new vote to reinstate dividends on preferreds.
Because of the emphasis this management places on ethics and doing the right thing by shareholders and other creditors, I would say there is some chance that they would try to makes preferreds whole again at some point in the future if the business recovers sufficientyl to be ablt to afford it.
The carry forward losses of $500m federal and $400m state will shield profit at current say $30m/year for a long time. However, isn't there a 6 year limit for corporations? However, if profits went from $30m to $60m to $120m etc doubling every year, we might be able to use all the NOL before it expires.
Therefore it is wrong to say that preferreds are toast. They do have some value based on probability of a full recovery and managements concern for their reputation.