"I learned charting from a friend who managed around 100 000 000 Million US dollars"
A hundred million million? Did that friend also teach you that a hundred million million is more money than exists in the entire world? Was he running some sort of intergalactic fund or something?
"if I was to buy 100 shares by March 20 they will pay me a divi dollar amount of 25 hundred dollars?? If so how long must you hold shares?"
To get the distribution, you need to be holding the stock at the open of trading on March 30, which is the ex-distribution date. That means you can buy it as late as the 27th (a Friday) and receive the distribution.
So then, why does the company say that the distribution will be paid to shareholders of record as of March 20? Because that's exactly who the company pays the distribution to. But any shareholder of record who sells their shares before the ex-date of the 30th will be required to forward the distribution to whoever they sold their shares to. That transfer is handled entirely by the brokerage houses; the company has no part in it. That'/s why it's entirely accurate for the company to say the distribution will be paid to shareholders of record as of the 20th.
Beginning on March 18 all shares of NATH will trade with due bills attached. Those due bills are what obligates the seller of NATH shares from March 18 through March 27 to forward the distribution to whoever they sold their shares to.
It is FINRA rule 11140 that governs big distributions like this and it can be found on the FINRA website at
"A special dividend and a regular dividend are essentially the same."
No, they're not. Regular dividends are usually (but not always) a payout of company profits. Special dividends can be a payout of profits but especially large ones like this one is not (though it may be partially so), so the tax ramifications are usually different.
"You are correct that if you are a shareholder as of March 20th, you will get the $25 per share dividend."
No, that is not correct. You have to be holding the stock as of the open of trading on March 30th to receive the dividend. Because of the size of this distribution the ex-date is after the record date, not before it as with normal dividends. It is the ex-date that decides who gets the distribution, not the record date. Just like every other distribution from every other company.
"But note that once that date passes [March 20], anticipate a steep decline in the share price."
No. The share price adjustment for the distribution will happen on March 30, the ex-date, not the day after the record date.
"They are paying an extra dividend of $0.36 in April, on top of the regular $0.54 early May."
No. The $0.36 is for two months of the quarter. They will not pay another $0.54 on top of that. The press release outright tells you that the $0.36 is for two months only: "The per share dividend amount payable by Omega is intended to represent dividends for February and March 2015, at a quarterly dividend rate of $0.54 per share of common stock."
The last $0.18, representing the third month on the quarter, will be paid at a later date, either to both the new and old shareholders from the acquired and existing companies, or, if the merger isn't yet complete, only to existing shareholders.
Prorated dividends like this are very common during acquisitions. Nothing new or special about it.
"Why didn't they just call it a special dividend?"
Because it's not a special dividend. It's simply two thirds of the normal .54 dividend, paid for only two months of the normal three month (quarterly) period. That makes it prorated.
Prorated dividends are quite common when a dividend paying company makes an acquisition. A prorated dividend assures that shareholders of the acquiring company get their fair share of a normal dividend before the acquisition is completed. To give a full dividend to the new shareholders from the acquired company when they would have been shareholders for less than the full three month dividend period would be cheating the long-time OHI shareholders.
"March 17th is both the date of some major Video Game releases and the dividend EX date."
No, that would be the record date, not the ex-date. The ex-date is March 13.
"It looks like vested Nathans stock options will be exercised."
If that's the case, then that's why the record date hasn't yet been set. Only the outstanding shares as of the close of business on the record date may participate in a declared distribution, so any options would have to be exercised before the record date. For the holders of the options it's certainly easier to wait until all options are exercised before the record date is established. Prevents any slip ups.
"Regarding the tax treatment, I think it will be treated as a non-qualified dividend distribution. In such a case, you would reduce your tax basis (cost) of your shares."
No, the only time you'd reduce your basis is when the distribution is a Return of Capital. With a non-qualified dividend, you pay tax on it at your marginal rate. I suspect a good portion of the distribution will be ROC, but I'm certainly not certain.
"Can anybody explain why this should or should not be a qualified dividend?"
Because it's primarily a distribution, not a dividend. Dividends are a payment of corporate earnings. Anything other than profits is a distribution, not a dividend. The portion of the distribution that represents current year earnings may well be qualified. The remainder will not.
"The simple fact is that if you take out $0.30 in dividend, the per share price is automatically and programmatically adjusted downwards $0.30 by Nasdaq"
No, it's not. The only prices automatically adjusted down by the amount of the dividend on the ex-date is the quote of the previous day's close and those of any outstanding orders not placed with a Do Not Reduce restriction. The opening price on the ex-date is determined entirely by the auction market, just as it is throughout that day and every day for every stock. That's proven time and time again by stocks not opening at exactly the previous close minus the dividend. Traders are well aware that a stock trading on the ex-date doesn't include the right to the dividend, so don't bid as if it did.
"and so, the net gain for speculators is zero, and, with the immediate panic and sell-off that follows this surprising adjustment"
The adjustment is no surprise to anyone who knows how it really works. It's a surprise only to those who don't.
"I am unclear on the tax consequences"
The tax consequences can be one of several, so it's probably not possible to know at this point. The majority of times, any distribution in excess of taxable income for the year in which the distribution is paid is a temporarily tax-free return of capital (ROC). In cases of ROC, your basis in the stock is reduced by the amount of ROC per share, so when you sell the stock, you then pay capital gains rates on the profit, including the amount by which your basis was reduced by the ROC.
Again, that's in most cases with big distributions, not all. Sometimes the entire amount is ROC, sometimes only a part, and in rather rare cases, the whole amount is taxable as non-qualified distributions (although that last one may apply only to spinoffs; I'm not sure). Those are the possibilities that I'm aware of and have experienced. I wouldn't even try to guess what tax implications will actually apply. Often times companies don't tell you until after the end of the fiscal year, simply because they don't know until the books have been closed for the year.
"What was the proposed amount per share?"
There is no proposed amount per share yet, but the high end is easy to figure. In its announcement of the notes offering, the company says, "Nathan's intends to use the net proceeds of the Notes offering to pay a special dividend of up to approximately $116.0 million." With 4.482 million shares currently outstanding, that comes out to $25.88 per share. The company didn't give a low end figure, but if it is indeed for defensive purposes, it can't be too much less or else the note issue would be pointless.
"it could also be a defensive measure by the board"
Yes, that's usually why companies that don't need the money borrow huge amounts with which to pay huge distributions.
"It is my understanding that the ex dividend date follows the dividend date with special dividends."
That doesn't apply to special dividends in general, but only when the distribution amounts to 25% or more of the stock's trading price as of the date of declaration. This one looks like it will be subject to that rule as long as the price doesn't go too high before the declaration. It looks more like a $25 distribution than a twenty dollar one.
No. Companies are not allowed to set ex-dates. Only the stock exchanges can do that, and their rules require more lead time than that anyway.