More net value will be realized on bank sale if SBLF is paid off first -
• Potential buyers of bank are going to view SBLF as a negative and use it as a bargaining chip to lower their offer.
• Pool of potential buyers is smaller, since not every bank has the liquidity to pay it off.
• Stock values are high now, so shareholders can sell other stocks and raise the capital now.
• After SBLF is paid off, shareholders won't have the threat of a stock offering hanging over the HBKS share price.
• Don't like an insider deal though - that would be a negative. Should be a rights offering of common to all existing shareholders. Convertible debt shouldn't be necessary.
• In the meantime, it's hard for shareholders to plan for the future liquidity-wise. While SBLF has a low interest rate, shareholders also need to sit on their personal cash while waiting for a potential capital raise. With interest rates being so low and the HBKS stock relatively high, better to bite the bullet now and get it over with!