Looks like the upside scenario is down 90% from here
Apparently the owners of this business can't even do math. Ford is going to own 91% for $500 million. Existing shareholders will own 2% of the business (before the rights offering) and the market cap, even after the 50% decline today, is $100 million.
Simple math tells you that the pro-forma pre-rights offering market cap is going to be:
$500 / 91% = $549.50 million.
To figure out how much of that will go to existing shareholders, just do the following math: 2% x $550 million = $11 million.
That means if this deal gets done, the existing shareholders will lose 90% from here ($100 million market cap today going to $11 million of value post-deal).
BTW, that is the upside case. Do you think management is selling 91% of the bank at $0.20 per share because this bank is solvent? The downside scenario is this deal doesn't get done and the equity gets wiped out because the bank fails.
This is the most obvious short I've even seen in my life. Base case: down 90%. Upside case: down 100%. Worst case: someone else comes in and offers marginally more, so maybe down 80%.