I agree that this is good for the overall health of the company, but the price drop was justified because the shares were diluted.
What concerns me is how the price trickled down the day before the announcement for no apparent reason. It looks like trading based on insider info to me. I like the long term outlook for BZH, but if upper management is passing out tips to their buddies, its hard to have confidence that there is a level playing field. I don’t have any evidence, but maybe the SEC should look into this?
No the SEC will not look into this since it wasn't that much of a factor in the price move or volume for that matter. The SEC doesn't have the time nor money to look into all these types of trading activities, it has to be egregious.
BZH continues to gain back any down turn in the recent pps as many more crunch the numbers and surprise, surprise find out this was a great move at the right time for the company.
swapping out a set of its bonds and tangible equity for new stock is not good which dilutes current stock and i believe they are doing this while the common is trading up and before the stock sells off again which will probably happen if the mkt tahes a dump or suffers a corection as we are a long way from a recovery by them in home building
Although dilutive to the current shareholders of the common it is a trade off of sorts. Value is what has to be considered. The reduction of an overhead cost to the company is a benefit to the balance sheet long term. The fact that they are paying less than the coupon is also a savings. IMHO this is a good deal for BZH and will be for the shareholder once completed. Reduced cost do to the value of the coupon vs. offer price and reduced interest payments going forward.
Also if BZH can afford to do this deal it would mean IMHO they are in better shape now. To me a very positive event. The price will fall off first as those traders who do not understand investing will sell. Going forward and providing the company dosen't do a reverse split at some point because of the share count the pps will recover. With the housing market showing signs of coming back this move will help BZH's share price move up as earnings are announced. $5 per share by June is my estimate and that would be a good start to a good return on investment at this point.