Well a play like this requires quite a bit of homework. If you are having trouble understanding the homework, you may want to sit this one out. Or, you can make a bet on the homewrok of others. FYI, in a release the other day, "In a recent interview, Broadway President and CEO Wayne Bradshaw told SNL that the company will finish its recapitalization "fairly imminently."
The company is trying to raise $4.2 million with 18.1 million new shares. That would be $0.23 per share.
It's insane to buy at the current $0.69 per share. If anything, a prime short candidate.
If the bank fails to raise money, it goes under.
If it "succeeded", the per share equity would drop to around $0.3.
Sambo, you're missing the most imortant piece of the recap which nullifies your calculation on the pps. Under the recap plan, they have agreements already from all 5 classes of preferred holders (including the U.S. treasury Tarp shares) to convert to common at 50% of the current face value, as well as the creditor to cut in half their principal for common shares. In addition they will sell $4.1 million of new shares. They filed the registration of the 18.1 million of new shares to cover all of those conversions as well. All of the current preferreds (totaling $17,489,000 by my calculation) will be exchanged for common at a 50% discount - so $8,744,500. Add the bank loan common exchange for $2.54m and the private placement of $4.1m and you get to $15,384,500 for the new 18.1m shares. That equates to roughly 0.85 per share on the conversion with massively improved Asset Quality numbers and a vastly improved texas ratio (i.e. a whole lot of upside).