No conversion news yet, but at least they are cranking out news almost on a daily basis. ENGLISH CRISTIN REID purchased 15K shares at .165 on 03/04/11. Looks like the management team is stepping up and putting money where their mouth is.
When the FDIC takes over, all the common and pref shares become worthless. So they are in the same boat with us, as is management that have a ton of stock and options. If the conversion doesn't go through, this will become the Titanic with no lifeboats. EVERYONE sinks with the ship.
The $20M in pref that they converted bought CBC a little bit of time, but not long. Either the Private pref shareholders convert or they go down with the ship. I'm sure the urgency is still there and probably more so since common ratio is either at zero or in the negative. CBC put more prssure on them to convert by writing off their remaining goodwill.
Simpler explanation; There are 11 different trusts (Capitol Trust I, Capitol Trust II, Capitol Statutory Trust III, Capitol Trust 4 (a/k/a Trust IV), Capitol Trust VI, Capitol Trust VII, Capitol Statutory Trust VIII, Capitol Trust IX, Capitol Trust X, Capitol Trust XI and Capitol Trust XII.). All held by different owners. Some have multiple owners, both private and public trusts.
Total worth of the trusts outstanding is about $180M, divided into 11 trusts. So lets say today, six of the 11 decide to convert and they account for $80M worth of trusts. This will bring the company's tier one capital ratio well on the positive side. The rest that agreed to convert could all of a sudden back out. Now the company is in decent shape but still undercapitalized. The rest of the trusts that backed out might want more to convert, because they don't care about the rest. Their main goal is to look out for themselves and to maximize their profit. The trusts that converted first would be at a disadvantage. By converting them all at once, nobody has advantage over anyone else and this will be the fairest deal for all sides. So now they are trying to coordinate the meeting of all 9 private pref shareholders (trusts) and have them convert all at the same time. Getting them all together, in one place at one time, might be causing this delay.
And I'm sure the private pref shareholders had their lawyers and accountants look over the recent CBC financial statements with a fine-toothed comb to make sure their investment is heading in the right direction before they converted.
It was suppose to happen on the eve of the first common vote. Private pref shares are not held by one entity and they have to coordinate the conversion where all of them have to convert all at once or it doesn't work. They can't give one private pref shareholder advantage over another one. If they convert one, the others might feel empowered to hold out longer for a better deal, since the urgency to convert might be lost. It's all about leverage.
The chances are really good, because that is the only way the private pref shareholders can recover their investment. Otherwise, their pref shares become worthless along with the common shares. For them, it's convert or lose everything, it's just that simple. I'm not sure why there is a delay, but not too worried about it.
A reverse split won't help them because the size of their market cap would not qualify. Only way to relist is to convert the pref shares into common. So we have to wait until that's done. The RS might not be necessary after the conversion, because the share price should move above $1 on its own. I'm sure there are many buyers on the sideline, waiting for the conversion news to get in. They might not make as much as people buying at these levels, but their risk is much smaller after the conversion news. So it's a tradeoff, reduced risk for a smaller gain.
Also, it's important to remember that the BOD asked the shareholders to approve the RS not to remain listed on the NYSE (most companies use the RS to remain listed if they fall below $1 for a period of time), but to regain listing in the NYSE later on. The BOD and management expected to get delisted and they also expect to relist in the near future. The RS is a tool in their side pocket to be used if necessary to regain listing on the NYSE.
Insider trading window opened up on the 4th, right after the earnings and the 3rd Q adjustment. I think this was the first of much more insiders buying to come. As you can see, the 15k shares were bought on the 4th and the SEC form was just filed yesterday after the market closed. So there is a delay between the buying and the filing.
Also the amount bought/spent is not the point. Why would she spend any money, out of her own pocket at all, if she thought the company was going to get closed down in the near future? I'm sure she has enough info in front of her to know whether the company will pull through or not. And this also happens to be her second open market purchase in last few months.
They have been working side by side with the FDIC the whole way. There is zero chance Capitol Bancorp gets taken over.
They have done what is asked, and that includes getting rid of a few decent banks they didn't want to sell.
It would be great if the FDIC took Michigan Commerce Bank, but we won't be that lucky. It would be nice if they could sell Michigan Commerce Bank to someone, while having the FDIC fund take a hit on some of the loan losses and then Capitol Bancorp can move forward as a smaller entity with a super strong balance sheet.
They won't be shutting Capitol Bancorp down. Otherwise, the CEO Joe Reid just worked like a dog for over a year for nothing....helping out everyone only to close shop? I don't think so.
They have a plan and that plan is on course.