Liquidation value is more than the entire equity value of the company ( in excess of $50 million ) In addition. no dividend may be paid to the comon unless a full quarterly dividend is paid to the preferrreds. Pending legal action my result in the cumulative feature being restored and reinstatement of the original terms agreed to by the company in the IPO prospectus. The absece of a sumarry judgement in the favor of management means there are enough serious issues to demand a trial on the issues. I do own the preferreds and I intend to continue buying them as long as the ps[ossibility for a 2000% + gain exists. At this point, if the suit is won, there are almost $10 in dividends at stake not to mention the $25 liquidation feature. As long as these clouds haang over the heads of management, I will keep the preferreds as the common is the more worthless investment.
I keep reminding you unsophisticated investor to due your due dilligence you obviously have failed. Remember if 2/3 of the class of preferreds vote to change the preferreds then they can permanenty change the preferreds they have already done that.
You dont seem to get that you own a worthless piece of paper. They can pay dividends forever to the common without ever paying dividends to the preferreds.
Read the legal docs, I have, preferred lawsuit is a joke. If you talk to preferred shareholders they agree that all preferreds are worhtless with th exception of preferred class B!
So even the preferred shaerholderds that are suing the company agree that the majority of the preferreds outstanding are worthless.
Now I disagree with them after my due diligence that the Preferred class #$%$ have any value.
(2) RANK. The Series B Preferred Stock shall, with respect to the payment of distributions and the distribution of assets upon liquidation, dissolution or winding up of the Corporation, rank (a) senior to all classes or series of Common Stock
I guess you dont know how to read (its only senior in a liquidation) !!!!!!!!!!!!!!!!
(e) The consolidation or merger of the Corporation with or into any other corporation, trust or entity or of any other corporation with or into the Corporation, or the sale, lease or conveyance of all or substantially all of the assets or business of the Corporation, shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation.
(Read this a merger doesnt count for the liquidation preference)
DOnt you get it!!!!!!!!!!!!!!!!!!!!!!!! Its a liquidation preference, there is no value outside a voluntary liquidation.
your due dilligence must not be very dilligent, re read the 8K filing from June 2009 at the SEC website. The preferrreds are still senior and they get the dividend 1st even if the suits are won by the company, which at this late date is in question. another negotiated issue is that the company may call the preferreds early. which at this point is at least $25. as of now, if the company loses the suit, the preferreeds will get 70 million dollars befiore you get a dime. No one will buy this company without first seeing that that issue is resolved.Any attempt to recapitalize to cover the obligation will dilute the common and further damage the security. For a sophisticated investor, you sure don't know much.
how would you feel if the company liquidated and you got not even close to what you are stating? Or nothing at all for that matter? The Preferred doesnt take precedence over all the other debt the company has. Plus can the Preferred lay clam on the new portfolio (which is where the value is). Because the legacy portfolio has minimal value. The CEO said it in the CC that there is no legal reason to pay the call backs on the legacy portfolio but to keep in good standings with the government we do. All of our new business is technically done under a new company (Excel Mortgage). Would your Preferred shares have claim on that?
also keep in mind that the preferred holders VOTED their rights away a few years ago. also mgmt stated on their cc that they DO have the right to pay the common a dividend while the preferred wait out the lawsuit , also mgmt said that NONE of the pending lawsuits concern them ! ( this includes the preferred holders lawsuit ! )
in the first place, if book value is where the company says it is we would still get about $15 per share in liquidation. In the 2nd place, the common would get no recovery at all, In the third place, the preferreds are with the parent, so what ever they own we get a peice of. Dissapointed? Not at this price.