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  • xmzhu1971 xmzhu1971 Apr 23, 2012 12:14 PM Flag

    Any idea about Preferred shares

    "the four series of preferred shares are pari passu, so when a dividend is paid on one series it must be paid on all series. when the A's and B's are converted, a cumulative dividend will have to be paid, and thus a dividend will have to be paid on the C's and D's. This has been confirmed with the company."

    This comments from Si

    I agree with him about converting A's and B's to common shares. Any ideas about their dividends?

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    • This is the post on investorshub about paying the accrued dividends on A:

      All this says is the A accrued dividends would be paid, but those would be paid in the form of additional common.

      Where is the prospectus language that specifically says the other preferreds would need to be paid?

      Does anyone have handy what is the accrued dividend on Preferred C after the second dividend is due mid-year?

    • Can someone post the part of the prospectus for A, B, C, or D that they think requires payment of arrears on C or D if A or B is force converted to common?

    • I have read the relevant part of the prospectus, and I am highly unconvinced that converting the A/B preferreds would require payment of the arrearages on the C's and D's.

      In the original post about this on Investors Hub, my good friend Fernando says:

      > As per the A series prospectus, if they do the conversion the accumulated dividends obligation is definitely 'paid' for the A series -- Which would cause the B/C/D to be paid as well.

      But just because the exchange formula takes into account dividend arrearages, does not make that a dividend "payment". It's still just a cash-free exchange. If no cash is involved, then the other series of preferreds are not entitled to a cash payment either. IMHO.

      • 1 Reply to watcher713
      • On 4/1/2012 9:15 PM, Fernando Moraes wrote:
        This was QC's post: "Yes, I asked this question because I own C's and D's. Her opinion is that the conversion imply the payment of arrears and since all preferred are on the same rank, it have to be paid at the same time (in shares or cash on the converted shares and in cash for the others). But she add that A's will not be necessarily converted in commons on the first opportunity and maybe not at all and that it is possible that a global deal will be propose later, before the end of the year. They don't seems to be minded to pay any dividend soon. I asked if the CCAA is one of the possibility. She seems to be a little upset by my question and repeated that no scenario is discarded but that the objective is to have the best deal for the shareholders AND the creditors.
        Sorry I don't have more time for today, but I will try to post more during the week."

        Fact 1: She verified that the arrears would be paid upon conversion. (I KNEW IT!!!)
        Fact 2: She said conversion to common might not happen at all (We always knew that they might try to do a exchange for another similar preferred security).
        Fact 3: She also mentioned that it is a possibility the A's would only be addressed as part of a 'global deal' before the year ends. Always been a possibility, although in a global deal the A probably won't get the same terms as the C&D.

        I think her response just confirmed what we thought, that CCAA isn't really on the table right now but who knows where things can go if no deal is reached. Thats why she says 'no scenario is discarded' (ie: standard answer).

        I'd have to delve back into the prospectus to say this with conviction (I'll do that later), but I believe even if they exchange the A series to another preferred -- That would still trigger payment of the dividends for C&D.


        On 4/1/2012 8:53 PM, JOHN YARBORO wrote:
        So that is how they are going to try to get around paying the preferreds. They intend to convert to a similar instrument that will still have the dividends suspended. Either that or the banks are going to release the restrictions so they can pay 250 million for the A's-LOL.

        Fernando, feel free to add here because it is getting tricky. She told us on the call before the numbers were released that the A shareholders would have no choice on common or similar financial instrument. Glen seems to think it has to go to a vote. It would seem to me also there should be a vote if it is anything but commons. If not then they could convert and say it is still suspended thus all are still suspended. Is this their game?

        What is also interesting is her reaction to the CCAA question. Do they not know they cannot? Unless there is some way they can show they are insolvent they cannot go that route. Why didn't she tell him that?

        I will call the lawyer tomorrow to see if his group is interested. If they are not then I will post what he said about CCAA and even the scenario of future possibility being no. I will also mention that this is from a quebec securities lawyer and if onereality or anyone else doens't believe this then to please call a lawyer and confirm or deny this. I am sure that will get back to them. I am getting tired of this game they are playing. Vic, when I said they are acting like they are going bankrupt I meant by their actions of pulling the LOC and suspending the preferred dividend. We know they are not anywhere near that.

        Let me know what you think, perhaps I will be a bit cooler in the morning.


    • I want the C and D shares to recover too, but bondholders on BNN are saying negative comments on commons, preferreds and convertible debentures. They have no rights until the company does not make an interest payment and does not mature a debt. Last comments says the company can meet obligations until 2016 and 2017.

      BUY 0.065 Joey Mack Bond Maturing in 2015. Hold or sell? This company is a distressed credit. He feels the 2013, 2014 and 2015 are Buys at current levels. Trading too cheap relative to what he thinks the eventual work out will be. He is fairly sceptical that all of these bonds will mature. (He owns some of their debentures.)

    • my point is that markets can be extremely wrong from time to time

    • I want my preferred C's and D's to recover as much as the next guy but comparing this to a bank is comparing apples and oranges.

    • Take a look at BBXT - preferreds traded down below $2, now at $32 and paying $6 of cumulative dividends soon

    • When CBl was at $2,I bought 6000 shares. Now, its price is $19. Meanwhile, CBL was at price $2-$5 for more than one year period.

    • Price of preferred shares are saying or implying problems.

    • I am guessing that they have to pay a dividend if and when they convert the A and B's, on the c and d's. But what if they issue another preferred share with a maturity date atleast 10 years or perpetual preferred? (similar product with longer maturity feature to cash flow the company)