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Newcastle Investment Corp. Message Board

  • waynesonnen waynesonnen Apr 18, 2013 6:32 PM Flag

    Question: Preferred stock after spin-off.

    This wasa question on a SeekingAlpha article. I thought it was a good question, so I'll ask it here: Does anyone know what happens to NCT's preferred stock after the spin-off?

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    • You need to read the prospectus. It will tell you what the preferred shareholder's rights are when assets are distributed through spin-off.

    • I think I answered it before. It remains the preferred of the company that issued it. As I recall when I looked at their articles, the spinoff is not a redeemable event. Now some may think this is a problem because NCT will have half of the assets after the spin off, but the preferred is not that large a part of their equity. I think it was less than 10% but you would have to check.

      • 1 Reply to marklibera
      • You are correct, it's not a large amount:
        1,347,321 shares of 9.75% Series B Cumulative Redeemable Preferred Stock,
        496,000 shares of 8.05% Series C Cumulative Redeemable Preferred Stock
        620,000 shares of 8.375% Series D Cumulative Redeemable Preferred Stock

        Yearly payments total $223,216.

        Common stock outstanding is about 250 million. At 88 cents/year, the dividends are currently $220 million. The amount paid to preferred is insignificant. I guess that answers my question: If it's insignificant, then it does not matter.

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