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Citizens Republic Bancorp, Inc Message Board

  • j25or624 j25or624 Sep 18, 2009 11:52 AM Flag

    So is it really diliution??

    Corparate Robot, Market Junkie, Dallas BBQ, Insomnial, etc etc.

    Guys I only have a minute here but is there really that much dilution going to take place here?, you all know the numbers and it's not 1.2 billion shares going to be dumped on the market but let me ask you this, in exchanging the commons for the preferreds is that not exchanging one equity vehicle for another equity vehicle and thus no real dilution?, and no more dividend and interest of the preferreds and thus improving the balance sheet and the commons?, same thing BPOP just did for the most part, and CRBC's portfolio is in better shape than BPOP yes?

    Thoughts?

    John

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    • This dip and volume is being driven down by the preferreds so they get more shares. It will rise after the price is set.

      • 2 Replies to dallas_bbq
      • We should be safe in backing up the truck at .20 cents.
        Was going to wait for a dime, but may stop the slide at .20.
        Should be safe then unless the Feds take notice.

      • You are back, how nice, thought you all ran or turned to shorting.

        How is it being driven down by the preferred, shorting, Qmark.

        If they are shorting and not borrowing shares thinking they already have them, if they donçt could that be illegal naked shorting I wonder.

        Gee, dallasbbq, you and corporaterobot assured the price would go up after this plan was approved but you were wrong. I suppose we should assume you are right this time.

        The more shares that go towards the conversion the less chance this stock has of ever recovering, if you want to understand that go read about dilution.

        Oh, but you are the corporate attorney who explained everything about why this plan was a good one, getting the facts wrong, mistating things, perhaps as an attorney you should know that you shouldnt go around looking like you are promising invesors a return, but then again maybe you just said you were one and are really just from a pumper/basher firm paid to push this capital plan through, who knows.

    • They are all gone dude, maybe they are shorting and coming back with a different handle.

      Dog and pony shows go like that.

      No dude, keep telling yourself that this CEO can give away the store just to raise chump change and it is not dilution.

      Tell yourself over and over that all the others can raise a whole lot more capital with a whole lot less dilution yet somehow this one who does it a lot differently raising less with many times more shares is not diluting you.

      According to dallasbbq and corporaterobot, it does not matter, because this stock was supposed to go from $.75 to $1.20 or $1.50 on the news, why they or their pals even explained how they would run it up above $1 by today and this week, going well above that because that would make the dilution less.

      Only they did not bother to point out how the stock already tried to do that but when it hit $.89 this CEO gratuitously issued a press release giving the debt an even bigger premium over maket, just an added kicker for the debt and a kickdown for the common, then the stock tanks.

      But somehow investors were going to still trust this CEO to do the right thing, somehow, they said, this stock would go on to $1.50 where you could sell and score a double, or even $2.70, and $5 and $7 and whatever despite a massive dilution that raises only chumpchange yet increases the number of the shares 5 to 8 times or more.

      Keep telling yourself that is not dilution, and if you want you can invest in BFLY and all the others like this, what fun.

      FWIW I have yet to unload all my shares but I gave up on this one after her 8/19 press release which sure looked to me like it was specifically designed to trash a rally in the common stock, which it did, and I hope she is investigated for that if this thing goes wrong.

    • Excuse me, I have a BA in Business Economics, which I consider a finance degree, you´ll probably go on and on arguing I somehow misrepresented things because technically that is not a finance degree, by some definition you come up with.

      In parri passum you went on in another post, as if you could explain preferred to me and all the deals that have been going down, give me a break. The way this CEO is doing her plan it is called squandering the company´s future when IMHO.

      And you were very wrong in citing C as supporting your argument when in fact C gave the common a very large premium to the market, you were very wrong in arguing or implying that there was no real risk of a deficiency notice just recently, and you have been wrong in your predictions of a price rise after approval of this plan so far at least.

      In parru passum or whatever you said, sure. For me it is called in the pocket when you invest in the ones that don´t cow tow to preferred holders and don´t give away the store for peanuts, because those stocks do rally strong after a restructuring if the management is getting all the other things right too.

      In pari pasado, pal, is what plans like this one might be called, massively diluting when they in effect raise chump change, expecially when it is so obvious the competition has been raising far more with far less dilution simply because they approach it differently.

      There could be real value here, I don´t think we disagreed on that, but obviously this CEO cannot unlock any of it before a capital raise. That is why CEOs hire independent financial advisers to consider alternatives in these kinds of situations. Me, I have given my advice, as I said before I may hold what I have left alittle while longer and annoy you still, or I may just take pleasure in unloading the rest and move on to greener pastuers, and I wish you luck.

      If I ever did go back to professional life which I certainly don´t plan to, it very well might be in workout type situations. But I would be demanding top salary and bonuses without even listening to so much as a giggle over it, before walking out on them.

      What this company ends up as will be the fault of the CEO, if her plan works, good, IMHO that will be because she modified it or lucked out. I did my best to argue against what I thought was a shortsighted plan that could hobble this company long term. In my view that makes me a winner regardless if I sold out and lost some money in the stock and the CEO did the opposite of what I was investing in and hoping for.

    • It´s obvious that I stated the facts as I see them

      ¨Wild speculation?¨ you ask, geez. I point to things like the 30 to 90 default rates being down two quarters in a row and coming in at 2.04%, those are the numbers, I have pointed out a 3.96% reserves, and the 4.92% nonperforming assets to total assets ratio being below others like SNV or MI, yet they just want to dilute many times more than the others do, while raising a lot less, and all they say is that they may need it, yes, that is wild speculation to me. And a dog and pony show.

      ¨Insulting you?¨

      9/9/09 Corporaterobot responding to some posts of mine.

      This is how you start.

      ¨OK, you have some issues, dude. I'm not going to get in a pissing contest with you¨

      You then say

      ¨After 20 years, you still don't get that?¨

      In suggesting that I could always sell you say

      ¨But then you would probably have to vent your anger by kicking helpless puppies instead of yelling at strangers on message boards.¨

      After that I responded in kind, then you got all acting up like you were somehow immune to common decency but I wasn´t, as if you could go on like the above, I could not respond in kind, then you could get away with accusing me of your name calling.


      ¨Finance degreë?¨

      I have already noted the degrees I have on this messageboard after being challenged, I asked you if you have one. Since you answer with a question I assume the answer is no.

    • Yes, it is considered dilution of the common stock.

      Even if your proposition was correct, it wouldn't last long since after conversion there will be "new" preferreds issued at some point anyway. Here's the link to part of today's SEC filing:
      http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6805720-6017-8730&type=sect&dcn=0000950123-09-044167

      The filing says that there are 5 million Preferred shares authorized for the capital structure. So, after converting the existing preferred, they will then have the ability to issue up to 5 million new preferreds. Some of these preferreds will be used for CAP funds (as per the 10Q, not me).

      Before Kab blasts me for being a supporter of the 1 billion shares, let me go on record that I am neither FOR nor AGAINST the dilution. I did not have the right to vote on it (did not own common on the date of record). When I entered this transaction all of this was already in the works.

      As a trader, I play the cards I am dealt (notice I said "trader" not "investor"). I worry about the things I can control - not the things I cannot control. That's why I bought the preferreds. If the vote didn't pass I would end up owning a Trust preferred stock of a bank that I think will survive with a sweet cumulative dividend (a good thing). If the vote passed, I would be buying the common at a discount through the conversion process (hopefully a good thing).

      • 1 Reply to CorporateRobot
      • Ain´t going to attack you for making trades around this thing, corporaterobot, but I am now just shaking my head adding capital letters to my description of this plan being bozo. It is management here who is at fault.

        If they are massively diluting to convert the preferred, why the heck would they then plan to issue more preferred?

        There is very big risk here that the later preferred would come at more expense I would think. At any rate they are taking on enormous risk and uncertainly and I don´t think that is justified for the chance of shaving a point or two off the coupon, if that is what it is all about.

        If it has something to do with a second TARP application then I would question the need for that, I am not sure TARP is that readily available for a company this well capitalized to begin with.

        Same with the debt, which has always confused me. It is 2013 debt that bears a 5.7% interest rate, I seem to remember, which does not seem that bad. After this plan, and if this stock just wallows, I really find it hard to believe that CRBC will be able to issue new debt if they need it for that low, I would think maybe 7% or 8% if they are lucky. Then they will really look dumb.

        It looks like it is concocted just to get the equity ratio up a little in order to get more TARP they may not need, but then they look like they plan to go back to the old ratios and structure.

        What greedy little bankers I now have to think, it looks like a grab for money they don´t need and I hope if it is they get rejected.

        Who the heck needs all that capital anyway, it is expending its future options for a quick grab of not much, and it has enough for any recovery. It has a good deposit base and loads of liquidity, they are wagging the dog with the tail, I think.

        As I said before, when you go fishing you don´t catch all the fish out of the hole just to through around the extras to lay there on the ground because you think they look good there, you catch what you need for dinner and, if you need to, you go back the next day.

        Enough of this, I hope I can keep to my goal of no longer posting here and that starts today, it´s the weekend and I wish you a good one.

    • Sure, this thing is going to end up issuing hundreds of millions of shares to do an exchange that may not be necessary, and do it at prices that are well below historical lows for this company, in effect giving away the store for chumpchange, but it is not dilution. Sure.

      If they had done this through independent advisers, or anything like the others have been doing it, they would have waited and limited the dilution, they might have asked for an authorization of 300M shares for example. They might have set a goal of 270M shares and $3.25 which might be justified with the valuation and other metrics here, then they could have done the exchange plus done a secondary, and raised more capital with less dilution. All my others did it that way, as did the ones I have looked at, and CRBC is better off than some of the latter.

      When capital is managed like this then your argument is a valid one, they are in effect giving up common to remove debt and preferred, but when it is done at fire sale prices in mass dilutions it usually gutters the company and it quite often limits the company and it is downhill from there.

      It is all about managing the capital of the company and new shares are capital, the ones who survive do not fritter away all that future capital raising potential groveling for chump change which is what this plan looks like it is doing. Why the heck else would the stock have gone sub $1 and stayed there?

      So, six months down the road, when the economy turns and they want capital for expansion, what will they do, raise debt and pay 8%, wow, they will look so dumb by that point there may be little hope for this thing.

      Look at what SNV just did, they should be fine, their total shares will probably around double through all this, many of the others will end up less than doubling their shares. This ones metrics are as good or better than ones like MI, SNV and HBAN, yet they just piss it all away in a 1B share plan. C, BTW, gave a premium to the common at $3.20 or more, BPOP set the conversion at $2.50 when the common was at $1.70, giving it a premium. HBAN simply bought the preferred out at $550 per $1000, effectively doing the same.

      This CEO and her plan is just a bunch of hooey and games, trashing the common. She should hire independent financial advisers, put the issue aside and behind the company for now, and get on with the business of turning the operations around here.

      JMHO.