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RAIT Financial Trust Message Board

  • mario_luis_gomes mario_luis_gomes Mar 16, 2011 10:29 AM Flag

    Why did they not just issue 30 million shares?

    Would that be much better?

    They would'nt have to pay interest, and all this mess...

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    • The convertable notes will sorta act as an anchor to having the shares move up...i.e. if the RAS shares go to $3 or more, then people holding the converts. can convert the notes to NEW SHARES (and get their's for $2.56 / share), diluting the existing, sorta like "the Sword" hanging over the shares.

      Generally, the "conversion price" is set quite a bit above the existing share that sorta tells you something about how strong the markets feel about RAS...not too strong.

      Some would think " why issue $100 million in convert. notes at 7% interest...rather than sell the shares at $2.56 outright...get the money...and not have to pay 7% on the paper"...Well, that also may tell you that things are not "strong" and perhaps they could not get an underwriter to simply take the shares at $2.56 (without the 7% sweatener).

      Bottom line : those convert notes will likely be like a weight around the neck of the RAS common shares....until all the notes are eventually converted....and that may be awhile....So, that may also be a reason that some would "leave the common stock"...don't wanna sit there in "dead money" , with little upside for now...But if they have much better earnings, etc, they can move ahead even with the converts hanging over them...but they'll have to do a good job...and the economy will have to recover more !

      I'd have actually thought the converts would have been 'decent' news for the preferreds...i.e. that the company is raising $100 million for their needs...should have strengthened the preferreds...but yesterday, they go whacked...haven't looked this morning, tho....All in all tho, I'm optimistic that they'll climb back up, going into the next x-date...but no promises (I've seen asinine stuff before, with AHTPRD in the past)

    • Simple, they probably could not fill it.

    • because there are a lot of stupid people out there....including mgmt of RAS. this was a really dumb deal.

      • 1 Reply to generic_stock_alias
      • Dam those mofockers... They keep destroying this stock. Its going to be harder to make any money trading RAS going forward.

        I'll have to wait more to get back into this, I'll be buying again < 2$ not a penny before because I think only a miracle can take this sucker back over $3.

        It used to be a pretty predictable stock, but now I'm not sure anymore. So it's best just to way for really low range price... In the meatine, these are the stocks I am long right now:

        NGB and XIN. They both managed to stay put the last few days even though the marked crashed. This is why I for the most only invest in beaten down, profitable value stocks.

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