something about the value of fixed assets, what
do you think about that old stalwart in your
backyard, Danbury Industrial (DBRI)?
P.S. Best of
luck with THQI and LCCI. I enjoyed your posts here at
PZN and don't blame you for throwing in the towel.
Wish I'd done so a long time ago...
Time to move on with most of
THQI and LCCI are looking great here.
PZN is in
need of alot of help.
I thought they would be
weather this transition better but
golden parachutes to Doc and
the other fraudulent
Your statement that nothing was created would be
incorrect as a large increase in Market Value of CMM was
created the day the stock went ex-div.
I know what
your trying to say, but, like most posters are trying
to say, we consider an increase in the overall
valuation of our investment to be significant and to have
value. I don't really care how it is done, I just want
my investment to keep rising in value.
truely believe you will see that when PZN goes ex-div.
the value of PZN common will not drop by the same
amount as the valuation of the PIK div. (the new
Preferred). Investors will therefore realize an increase,
significant, in the valuation of their overall investment.
Common may decrease some after ex-div. but similiar to
CMM the decline will not be material.
investment in PZN will increase due to this div.
12% Pay in Kind for the first 3 years, thereafter
in cash until
this preferred is called at
option at certain specified future
dates. I am
referring here to the
$150,000,000 preferred that
will issue to cover its 1999 final
to avoid an
otherwise $100,000,000 tax bill.
No, I am not saying the preferred dividend has no
value. I am saying it has no NET INCREMENTAL value. That
is, holders of existing common will have the same
intrinsic value both before and after they receive the new
preferred. (Market value is another thing, and fluctutates
according to lots of things.)
Intrinsic value to
shareholders is the present value of all CASH that they will
receive over all future periods based on their holdings.
When you sell some shares you are converting your
claim on future cash pay-outs by the company to cash
paid by another investor based on that investor's
estimate of intinsic value.
No new value can be
created by issuing paper shares with claims on existing
future cash flows. That new paper simply divides up the
future cash flows among more pieces of paper than
before. Since the same people hold all these pieces of
paper, there is nothing new created.
The deal may
be the best possible, or there may be a better
alternative. Let the institutions decide, by voting no.
As a holder of PZN common, I hope we have the
same experience you had with CMM. However, what you
describe is equivalent to an increase in the market's
valuation of the company. Prices go up and down every day.
If issuing a PIK preferred CAUSED an increase in the
value of the company, then PZN should do so daily for
the rest of eternity.
The fact is that the
issuance of a PIK preferred amounts to nothing except that
at some future date PZN may actually pay CASH
dividends on this preferred. The present value of those
pay-outs is the real value of that preferred (count in
there also any cash dividend paid on common that was
created by conversion of the preferred). But these future
cash dividends simply reduce the future cash available
to pay out on the existing common.
no free-lunch. Nothing is created here, and nothing