HLPRB I read the HL board with great interest. I agree with you that it would make sense for HL to buy back as much of the preferred as they could get at these levels; but what puzzles me is why you would rather buy HL bonds(debt) that would pay 8 or 9% when you could buy HLPRB today that yields over 15%? If HL goes belly up, neither one will be worth much, not that I think HL is even close to going belly up or to defaulting on the HLPRB dividends.
When HL recovers, HLPRB will show good capital gains in addition to the great dividend. Please explain your investment reasoning since I obviously am in the dark having bought HLPRB at 33 3/4 after watching it decline from $48.
If HL survives, HLPRB is a great buy at these levels IMO; granted not as good as e-stocks if one can pick the right ones. IMO HL has a better chance to survive than most of the e-stocks, but then what do I know. I'm down 33% if I sell today which I won't.
The bonds I proposed were backed by the precious metals themselves. Presumably Hecla has some real, producing mines that could put metal aside to deliver in the event of calamity. They might be able to get better terms than 8 or 9 % with this kind of arrangement. Perhaps a joint issue with a refiner like Englehard would make the issue even sweeter for all concerned.
I might put a security like this in my IRA where I value safety and can't write off losses. I'm really just proposing ideas to tide the company over until the inevitable turning of the tide. There are so many artificial forces retarding prices now that survival is the key to play again another day. Issuing more common at dogmeat prices would simply reveal how uncreative the management is. It would also bury hopes that substantial investors might take some of the common supply out of circulation and play for some real money. I'll look to learn more about the basic metal side of HL's business at the club site I saw in another post. Good luck with HL_pb. I think you will be OK in the end but might have to sweat through some ommitted, cumulative dividends as a worst case scenario. Oh yeah - I'll be sweating with you.
phantasm08037, proposing to set aside any kind of asset including precious metals themselves that can't be reached or attached in the event of corporate clamity such as going belly up probably is not possible. If I remember my corporate accounting correctly, in the event of corporate bankruptcy any remaining assets are applied first to satisfy bills owed to common creditors first, second to pay bond holders debt obligations, third to pay preferred stock holders, and last to distribute remaining value to common shareholders.
For your scenario to play out, HL would have to issue bonds in addition to the preferred stock which already exists which isn't very likely IMO since issuing debt instruments creates another permanent interest paying obligation even more binding requiring timely payment of interest than cumulative preferred dividends.
The only way that I can see that HL common shareholders could benefit is if HL filed the proper notifications and had extra cash to buy back their preferred stock now in the open market at these bargain prices which would free the company from those preferred dividends. That's not very likely since they have very limited cash available.
There are no free lunches to investors in public corporations. One has only to look at what happened to shareholders in RYO(Royal Oak Mines)during this past year. The only answer for all of us is for HL management and BOD to keep their act together during these tough times. Because of HL's diversification beyond precious metals we have a better chance than most precious metal shareholders IMO.