The debt in Europe has not sold off....check for itself. Mf just needs one year to let this mature and they won't lose 1 penny. Needed more capital and this is where ib comes into play. Bad deal for short term but if u hold one ur plus will make out 3 fold.
Good post - BK is not always death to shareholders. In this case it is likely a way to stop a run on the bank, preserve the value of the futures business, and buy time for the Euro position to pay in an orderly manner - not crystallized in a distressed, abrupt manner.
The value of common on Friday reflected three points: 1) a run on the bank and expectations of business deterioration and haircuts on asset sales, 2) expectations of higher capital commitment due to rating downgrades (unwarranted as Euro debt is short term, high grade, despite what the media and bashers say), 3) related to 2 - fears about how much the Euro position were truly worth.
The deal on the table does the following to address these points:
1) The core operating units/subsidiaries continue to trade and transfer over to Interactive Brokers - stemming any "run on the bank", and enhancing value of the business substantially
2) Eliminates need for higher capital injection to cover Euro debt. Euro debt held at Holding company level, which no longer is engaged in regulated futures activities. In fact, any capital held on a regulatory basis against the Euro position is freed up.
3) Allows the Euro deal to pay off as Corzine intended. The position plays out by the end of 2012. BK will allow the Holding company to sit on the position and let it execute as originally intended by management.
My view - if this deal is as stated, then we are better off than what was priced into shares on Friday. And versus the pricing mechanism in Friday's share price, we will have an option on the Euro bonds. I.e. if those bonds do not default, then common will see a lot more upside, as they were likely priced for default or fire-sale in the current share price.
BK allows Corzine to let the position play out, and allows the rest of the company to operate unencumbered by the Euro debt.
Dont get me wrong - but I sincerely hope you are right as Im in with 5200shares @ 1.79 and I am scared of the 'opening' seeing all this crash violently. So what should I do? should I sell at open or wait until this climbs a little?
NO. Think of it this way. There's a small piece of pie. There are a ton of hungry people who want to eat it, but there's not enough pie to go around. Interactive says I'll give you a billion for the best part, the part without the broken crust, that little sliver over there. After I get that part, you slobs fight over the rest. And after they are done, shareholders you can get in there and carry the empty pan home.
Not enough pie, folks.
Give me some good logic. I am giving my analysis based on the news. The fact that they are paying 5 times the current price is because the market cap has been reduced to 1/8 of the shareholder's equity. It looks a lot but really is not. People have been scared scheisseless that the value would reach zero and oversold it.
I cant understand how you keep thinking this will trade higher?....Higher than what? as I think that this will trade below 0.50c from open and finish up around the region of 0.15...Never been here before but common sense tells me so - Stand to be corrected
you're the comedy... Yes I'd buy a corvette with a bad engine at over market value under cetain circumstances... maybe rare but there definitely there are some which exist or have existed. Stock could trade much lower as much uncertaintly is present although not as much as last week, especially with this happening so fast anything could happen from high to low and back again also inbetween. I'm really curious to what the volume... cetrtainly when the difinitely state what the outcome is the volume will be thru the roof, maybe the entire float or more.