The preferreds have not changed value. They are in the same position on the bk waterfall they were before the loan, and the $ value of the securities in front of them hasn't changed. Based on TNW, the preferreds would receive full value if no one has fudged the numbers, and no one has indicated they thoght they have. The only effect the loan has is to increase interest expense by almost all of the interest associated with the tranches since they were paying LIBOR on the majority of the not.
I agree. I'm not sure why the preferreds rallied today other than on the general outlook for the company. I guess technically the new secured debt impairs the remaining unsecured debtholders but since they are going to use the proceeds to pay off near-term unsecured debt I don't think the remaining bonds will suffer. Interest expense will go up as they retire the October converts (coupon LIBOR+0.50%) but will free up cashflow to start working on 2013 maturities with an average coupon > 7.4%. Or alternatively to make new investments with a yield greater than the cost of the new debt. Wind