you're absolutely right. if management is going to practically sell/dilute the company for 50% of book value, then what does that say about this company??? IRSA is a vulture fund, and SPPR is the corpse.
If you are a new investor at $0.70 or below, then the prospect near term of $1 a share is OK. However, nearly every hotel REIT out ther can give you that kind of return if hotels and market conditions continue in their upward trend. You take the risk that the world goes into the toilet and hotels follow suit. In taking that risk, do you want to share that with a partner who will eat ALL the profits "forever after". Dilution of 4 times. For what, a POS loan of $20M (or $30M) at 6plus % that has all these golden handshakes of $1 and $1.20 puts. HT sold the common out with a lowball $2.50 share price for 5.7M shares plus option of 5.7M shares at $3.00 for 3yrs. HT had 40M common shares in Aug 2009. IRSA bought tons in the market as the price remained low. There are 170M shares today, HT only doubled out of the all time lows, is stuck forever at a 6c dividend/q compared to the good times 2007 share price of $12 and a dividend of 0.18/q. Because of the dilution, I doubt HT will return to its highs in 8-10yrs. HT mgmt sold out the shareholders, their compensation never suffered(other peoples money). The dilution and stagnation outlook for SPPR appears to be far greater than HT. This downturn is over for the US, and SPPR doesn't need this kind of VULTURE partner. As an investor, I would love IRSA's deal in asmaller package. jtaylor
This is positive on a number of fronts. It ends the always tougher demands made by banks. It reduces the need to cut selling prices just to move properties. The company has been paying large pre-payment penalties to lenders. It legitimizes the company that Eduardo Elstain (see below), a buddy of George Soros, is kicking in $20 million. It definitely secures the existing preferred and rules out bankruptcy. I hate dilution but some times you have to bite the bullet and realize that you may be one bankers rejection away from bankruptcy. http://en.wikipedia.org/wiki/Eduardo_Elsztain