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Hecla Mining Co. Message Board

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  • axzl axzl Dec 31, 1999 6:50 AM Flag

    cumulative preferred

    phantasm08037, proposing to set aside any kind of
    asset including precious metals themselves that can't
    be reached or attached in the event of corporate
    clamity such as going belly up probably is not possible.
    If I remember my corporate accounting correctly, in
    the event of corporate bankruptcy any remaining
    assets are applied first to satisfy bills owed to common
    creditors first, second to pay bond holders debt
    obligations, third to pay preferred stock holders, and last to
    distribute remaining value to common
    shareholders.

    For your scenario to play out, HL would have to issue
    bonds in addition to the preferred stock which already
    exists which isn't very likely IMO since issuing debt
    instruments creates another permanent interest paying
    obligation even more binding requiring timely payment of
    interest than cumulative preferred dividends.

    The
    only way that I can see that HL common shareholders
    could benefit is if HL filed the proper notifications
    and had extra cash to buy back their preferred stock
    now in the open market at these bargain prices which
    would free the company from those preferred dividends.
    That's not very likely since they have very limited cash
    available.

    There are no free lunches to investors in public
    corporations. One has only to look at what happened to
    shareholders in RYO(Royal Oak Mines)during this past year. The
    only answer for all of us is for HL management and BOD
    to keep their act together during these tough times.
    Because of HL's diversification beyond precious metals we
    have a better chance than most precious metal
    shareholders IMO.

 
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