1. They are still senior to the common in any transaction
2. unless a preferred dividend is paid , the common cannot get a dividend.
3. If the preferred lawsuit was not winable by the shareholders, it would have been thrown out or settled by now
4. Par on the preferreds is worth more than the company at this point.
5. The company will have to deal with the preferreds before many more quarters.
6. The only way they come up with the cash is to borrow it or offer an exchange for common stock.
7. At yesterdays market close. The preferreds would have to be worth 2 shares of common each or about $37.50 cash
8. $37.50 devided by $1.15 closing price for impho = 3260%
9. Patience is a virtue, you will see
yes they are?
What are you talking about? Havent you read all docs yet, including lawsuits preferreds are worthless.
The company interviewed several law firms before chaning the indenture doinga tender. They were very careful how they did everything.
Company has zero worries regarding preferred lawsuit. If you read the legal docs, the case is ridiculous.
Sentiment: Strong Buy
The lastt person to reply to this post said "The company will have the upper hand and depending on where the pps of the common is....A 1 for 1 swap (or maybe less) would be a good deal."
Tjhis is not a true statement. As long as par on the preferrreds is $25, whether the preferred holders win the suit or not, the common has no equity value until the company itself can accurately post an equity book value of more than $25 per preferred share excludung non tangables., if the lawsuit is won that number rapidly approaches $37.50 per share. The point is that these shares will hang over managements head until they resolve the issue, and the securities cannot be called at less than par. They cannot sell the company or effect a merger without paying it off and until they do, they cannot maximize their stake value. Hide and watch.
If your are talking about my statement then you forgot to mention that i said it depends on the value of the common.....and the only leverage that the preferred have is the lawsuit. Take that away and they have nothing because the company will not be required to pay them anything....Correction, the 2nd leverage they'll have (if the lawsuit is lost) is if the company wants/needs to issue new preferred stock.
You guys are wrong, and have not done the proper dilligence. When they did the tender, they also changed the indentures on the preferred:
1. Preferreds are not cumulative
2. Dividends can be paid to junior securities
3. The only value preferreds have is in liquidation. Otherwise the change in the indenture, allows managment to keep the preferreds outstanding, defer payments indefinitely, pay dividends to the common.
4. also even when dividends are in arrears, preferred holders dont have right to elect directors.
Thus the change in the indenture means, preferreds only have value in a liquidation scenario.
This is why they tendered for the preferreds. Otherwise managemnt would have shut down the company and started somewhere else.
So all the value currently being created flows to managment and shareholders.
Sentiment: Strong Buy
Are these cumulative?
We're the preferred holders asked to do a tender in at 15 cents on the dollar. If so then the ones trading are the ones that were not tendered in but essentially the value is capped at just that $3.75 ( $25x .15)?
If You might know, kindly clarify.
you need to do your due diligence. Greater than 2/3 of the class of both preferreds voted to change the indenture and at same time sell preferreds to company. Therefore the preferreds trading now have had the indenture change, so the preferreds
outstanding are completely worthless outside of liquidation.
1. the company can pay common dividends without paying preferred dividends
2. the preferreds are non cumulative
3. no amount of unpaid dividends leads to voting rights or board appointment rights.
4. the company can merger or be aquired without triggering preferred rights.
Only in a liquidation do preferreds have seniority to common
Sentiment: Strong Buy
the preferreds still have a par value of $25 and a dividentd must be paid to them before common sees a dime. As of now they are not cumulative, but there is a pending lawsuit to restore all original prospectus feature to the preferreds. right now the preferreds are worth more than the company. we will see how it turns out, but the company will have to deal with their existence, if try to recapitalize or sell. The balance sheet has a huge entry reserving the cumulative dividend so the company must not be all that confident of the legal outcome.