. If money is that tight they should suspend the dividend until profitability improves. Of course cumulative means dividends will accrue until payments are resumed. Also, I am not aware of any Hecla bonds that trade in the US. The convertible bond was called some years ago.
I think they would be better served to issue bonds backed by ounces of silver and gold themselves at 8 or 9 % and buy in preferred shares in the open market. What would be saved in dividends would more than make up for payments on the bonds. I'd certainly be a willing buyer of such collateralized bonds.
Its an interesting idea, but from what I can see they have sufficeint cash to make the payments and with the growth in the industrial sector shoudl be turning a profit even after they pay out the prefered. It is always beter to grow your way out of this kind of problem, rather then inflate your way out or go heavily into debt again.
HLPRB I read the HL board with great interest. I agree with you that it would make sense for HL to buy back as much of the preferred as they could get at these levels; but what puzzles me is why you would rather buy HL bonds(debt) that would pay 8 or 9% when you could buy HLPRB today that yields over 15%? If HL goes belly up, neither one will be worth much, not that I think HL is even close to going belly up or to defaulting on the HLPRB dividends.
When HL recovers, HLPRB will show good capital gains in addition to the great dividend. Please explain your investment reasoning since I obviously am in the dark having bought HLPRB at 33 3/4 after watching it decline from $48.
If HL survives, HLPRB is a great buy at these levels IMO; granted not as good as e-stocks if one can pick the right ones. IMO HL has a better chance to survive than most of the e-stocks, but then what do I know. I'm down 33% if I sell today which I won't.
The bonds I proposed were backed by the precious metals themselves. Presumably Hecla has some real, producing mines that could put metal aside to deliver in the event of calamity. They might be able to get better terms than 8 or 9 % with this kind of arrangement. Perhaps a joint issue with a refiner like Englehard would make the issue even sweeter for all concerned.
I might put a security like this in my IRA where I value safety and can't write off losses. I'm really just proposing ideas to tide the company over until the inevitable turning of the tide. There are so many artificial forces retarding prices now that survival is the key to play again another day. Issuing more common at dogmeat prices would simply reveal how uncreative the management is. It would also bury hopes that substantial investors might take some of the common supply out of circulation and play for some real money. I'll look to learn more about the basic metal side of HL's business at the club site I saw in another post. Good luck with HL_pb. I think you will be OK in the end but might have to sweat through some ommitted, cumulative dividends as a worst case scenario. Oh yeah - I'll be sweating with you.