Does paying in junior securities put them over
the 50% debt covenent limit? I would think
Another thing, now that the special dividend has been
paid out PZN needs to just deal with a regular
dividend payment. Regular dividends for C Corps. at least
may be paid in stock. Not sure about REIT's. This
would allow PZN to retain the $209mm and we would not
be diluted to death from a third party. No more need
for an SI. Anyone aware whether REIT can pay regular
dividends in stock?
I work on Wall Street and I heard this from
someone at another Wall Street firm. I've heard that
de-reiting is being seriously considered but of course that
doesn't mean it will happen for sure. Take it for what
its worth. As far as my source I'm sure you can
understand why I can't be more specific than that.
What are you missing? Well, one thing your
scenario is missing is the immediate filing of numerous
securities fraud class actions. And unlike the plethora of
frivilous actions we always see whenever lawyers see a
company's price decline and attempt to lay the fault at
management's feet, I would say this scenario would leave PZN
wide-open and vulnerable.
Ample evidence exists in
numerous press releases that PZN led investors to
anticipate both REIT status and the special dividend being
paid. Dividends were declared, and labled as one
particular type of payment by PZN's board. To renege on
these things in so cavalier a fashion would... well, we
might as well own a tobacco stock.
OTOH, I know
of nothing that would prohibit PZN from paying the
special and required dividends for 1999 as a REIT to
investors (I NEVER like the idea of paying IRS instead of
investors for the back taxes) and then converting to c-corp
for the year 2000. And perhaps that would be what is
required to satisfy the Banks and strategic investors
going forward; the end of these required dividend
"a rose by any other name is still a
Whether it's called a regular dividend or a special
dividend or just a big mistake (oops), the point is we
were paid $1.80 in dividends this year that they can't
Whether people like Dreman they have
more or better information and just how much is
debatable. Whether they get to express their views and
opinions to those in management who make a difference is
Why pay the special if you're going back to a C
Here's a naive question. Do investors like Dreman get
more/better info. than us regular guys? If so, this seems
like insider info. to me.
The rules for dividends for a regular dividend
vs. the special dividend would be the
Stock dividends and stock splits are "feel good"
dividends. They do not change your ownership in the company.
They are also not taxable. They don't work for REITs
or for "C" corps., for that matter, to distribute
the company assets to the shareholders.
don't know of anything that would prevent a REIT from
doing a rights offering. In fact, that would have been
my other recommendation to PZN if they had asked or
hired me. :-) In fact, had they done that months ago,
with 118 Mill. shares, just raising $2.00 per share
from the existing shareholders would have provided
them with $100 Mill. to pay all dividends plus expand
it it was only 50% subscribed!! Instead, we've all
seen our shares drop by more than $2.00 per share
since then and no solution in sight except to hire
someone else for advice. I don't know why they pay so
much for advice when workable solutions are so
I hate to even mention the words but....rights
offering. It's really the only "fair" way to raise a lot
equity. It allows each investor the opportunity NOT to be
diluted. You MUST pony put your new share of dough or be
dilutd to hell from what I've seen. In Canada all
secondaries by law MUST be right offerigs so as to give all
shareholders equal opportunity.
I've been involved in a
quite a number of rights offerings, usually with "stand
by" investor willing to take the rest unsubscribed
shares in order to raise the needed money. I would see
pZN as such.
The way it works. They issue
right to each shareholder to buy shares at a, most
likely set price, say $6/share. If you had 100 shares
the rights might give to the right to buy 40 shares
at $6. If you choose NOT to exercise your right to
buy you will be diluted by a MINIMUM of 40%. See why
it's a hammer? But it works.
Don't know if
REIT's can do rights offerings either...
Rights offerings are nothing less than extortion,
and what often gets hammered is the stock price, as
investors dump the stock. After all this, will Doc make us
bend over yet again? I say back to the c-corp if this
is the best they can do.
According to the shelf filing in January of this
All rights offerings must be open for 30
It also cuts the price to the new valuation
Institutions usually love rights offerings. Generally it's at
the cost of those that do nothing, it relates to the
over subscribtion option(low priced shares NOT taken
by other shareholers)...TucsonINvestor...you know
all about that. So I can see a buyer like Dreman
buying shares to get his record date holdings up(that's
how they issue them). Once the rights offering is
over you can rid yourself of "excess low priced stock"
and the high cost stock too. Your left with a
healthier company and extra low priced stock. The "extra"
low priced stock you buy MORE than pays for the high
cost stock you bought prior to the rights offering.
In the rights offering I do we estimate the probably
loss after record date and how much low price share
I'll get on the over sub option. In most cases I only
need 2 times my record date to off set my loss to be a
record date holder(the price drops). My over sub factors
usually are in the 5-15 times my record date holdings. In
the issues I am aware of 35% of the record date
holdings take appx. 90% of the over-sub. This info. I
received from a transfer agent agent. See why insitutions
love rights offerings?