"The whole idea of the R/S was to get WIN trading up in the range of their piers ($40+)."
No, that's not why it's going to reverse split. The price reduction on the ex-date will drop it well below where it is today. You obviously refuse to believe me when I state the facts, but how about the people who handle the legal work of spinoffs? Do you suppose they might know how it all works?
This is from the Wall Street law firm of Wachtell, Lipton, Rosen & Katz, in a publication titled "Spin-Off Guide:
"If the subsidiary being spun off comprises a significant portion of the value of the parent, the spin-off likely will result in a substantial decrease in the stock price of the former parent. A parent may implement a reverse stock split to move the per-share trading price of its stock back towards the pre-spin level."
"I guess you need to educate WIN and some of the investment houses that don't agree with you."
Your guess is entirely wrong because I did not state an opinion, I stated a fact. It is the way the market works, not a speculation or the kind of uninformed guess you're obviously making. And make no mistake: I have not ventured any statement of how the two companies' stock prices will perform once they begin to trade separately; I have stated the fact that the share price of WIN will adjust down on the ex-date to account for the value of CSAL no longer being included in WIN. That you don't know the difference is telling.
"You're saying there is no value in WIN having less debt and being more profitable."
I said nothing of the kind. I said that there will be no difference in value of the two companies between Friday night and Monday morning. After the two companies split, of course the potential for increasing value is there. It simply doesn't happen between the close of trading one day and the opening of trading the next day.
Your naivete is startling.
In looking back at some of your old posts here, it's obvious you haven't seen a spinoff before. Contrary to what you've stated in the past, the CSAL shares are not free. The value of WIN as of April 24 will be split between WIN and CSAL on April 27. Not equally, but split between the two. You're obviously in for a big shock.
"Why would it adjust down when the WIN value will increase because of less debts?"
Because it's disgorging itself of some of its assets. Up through April 24 WIN includes all the assets that will become CSAL on April 27. Why would anyone pay the same price for WIN on April 27, when it doesn't include the CSAL assets as they would on April 24 when it does include them?
If the value of CSAL were negative, then sure, there'd be no reason for the price of WIN to adjust down after the spinoff. But if the value of CSAL was negative, nobody'd buy it and its price would be zero. But there IS positive value to CSAL. It WILL trade for some kind of price. Therefore it has positive value, regardless of the debt. And that value being split off from WIN means WIN will be worth exactly that much less on the ex-date.
The parent companies of spinoffs always adjust down in stock price on the ex-date to account for assets that are no longer a part of the parent company. Just like companies do when the pay cash dividends. That's the very reason the spinoffs trade in when-issued form a week before the spinoff occurs -- to establish the value that will be deducted from the parent company's price.
Seriously, have you never seen a spinoff before?
Why would you want to buy WIN to get the distribution? Are you aware that on the ex-date the price of WIN will adjust down to account for the value of CSAL no longer being attached to it?
Well, CSAL is going to start trading on a when-issued basis on Monday, so its price will be established then. The when-issued trading symbol is CSALV. The symbol will change to CSAL the following Monday.
"I''ll stick closer to WIN's estimates on their website: $43 for WIN and $43 for CSAL. ... Go to windstream website, click investor relations, click reit, click update on reit spinoff, click investor presentation ... page 7"
You mean where it says Indicative Share Price 7.32 for WIN and 8.64 for CSAL?
43 doesn't appear anywhere in that document.
To be more accurate, you need to add the following to your post:
Any shareholders of record as of the distribution record date who sell their WIN shares before the ex-date, April 27, will also be selling their right to the distribution. Buyers of WIN shares beginning two days before the record date through the distribution date will receive the distribution not on the distribution date but on the due bill settlement date.
"I think the ex-dividend date (which is indicated as coming after the record date) is also a key date."
All the speculation of who gets the spinoff is based on the company's copy and paste of the general spinoff procedure from the SEC website. IR clearly doesn't understand the procedure. In addition to their own confusion, they're overlooking the fact that distributions with a value of less than one penny usually don't have an ex-date. That leaves the shareholders of record as of the record date as the recipients of the distribution. (When a company's distribution has no official ex-date, the effective ex-date is the same as for normal distributions, two days before the record date. The only difference being that the company's stock price is not reduced by the value of the distribution.)
To clear up how a spinoff usually works, the distribution is paid by the company to all shareholders of record. But all shares traded beginning two days before the record date through the distribution date are sold with due bills attached that require the seller to forward the distribution to the buyer of the shares. That makes the first business day after the distribution date the ex-date. Because the distribution is paid first to all shareholders of record on the distribution date, it takes time for it to be transferred to those who are owed it via the due bills. The shareholders who qualify for the dividends via the due bills are paid the distribution on the due bill settlement date, not the distribution date. The company plays no part in the due bill process; its participation ends with paying the distribution to the shareholders of record as of the record date. The due bill process is handled entirely by the brokerage houses. It is a complication for the brokerage houses that is unlikely to be used on a sub-penny stock, never mind a sub-penny distribution.
1. "are we getting the shares from the spinoff since we held through the 10th?"
April 10th has nothing to do with who gets the spinoff. Whoever holds WIN at the close od trading on April 24 gets the spinoff. Those who were shareholders of record will receive them on the 24th; those who bought WIN from April 7 through April 24 will get the spinoff shares on the due bill settlement date.
2. "what happens if you buy more now... will WIN give you spinoff shares for that?"
If you hold the shares at the close of trading on the 24th, yes. If you sell before the close on the 24th, no.
"If you have 1000 shares of win and the spin off closing price is $8.00 per share you would end up with 200 shares of csal at $40.00/share"
The value of CSAL will be determined in when-issued trading before the deal closes. For purposes of example, let's use $36.00 instead.
"Now add to that the win stock which will reverse split leaving you with 166 shares @ $8.00/ share or $1,328.00 in total equity"
If CSAL closes at $36.00 on April 24 and WIN closes at $8 on April 24, then the reverse split WIN will open around $4.80, as 20% of the closing price of CSAL will be deducted from the closing price of WIN to account for the reduction in value of WIN by spinning off CSAL. 20% of 36 is 7.20. Subtracting 7.20 from each pre-split share of Win puts it at 80 cents, so post-reverse split would put it at $4.80. 166 post-split shares times $4.80 is $796.80.
"When you consider the $1,328.00 in additional equity you pick up the first year"
The value of WIN at the close of trading on April 24 will be split proportionally between WIN and CSAL on April 27. You don't gain anything.
"No. The record and ex dates mean nothing in this case."
The ex-date is quite functional for this dividend. It is April 27.
"After those dates, WIN still trades as the original shares but changed into the package which is the new WIN plus the new REIT"
Wrong again. But at least you're consistent. While the record date has passed, the ex-date has not. With spinoffs and large cash dividends, the ex-date is the fist business day after the distribution date. That's why the ex-date for this distribution of spinoff shares and prorated cash dividend is April 27. The shares trading today are the very same shares that were trading before the record date. The due bills merely require the owner of record to forward the distribution to whoever he sold them to.
You obviously believe the ex-date has passed, apparently thinking that it was two days before the record date, as with normal dividends. There are many sources of the correct information and you'd do yourself a favor to study them and understand how it really works. Here are a couple to start with:
The SEC website. Under "Ex-Dividend Dates" it says, "Sometimes a company pays a dividend in the form of stock rather than cash. The stock dividend may be additional shares in the company or in a subsidiary being spun off. The procedures for stock dividends may be different from cash dividends. The ex-dividend date is set the first business day after the stock dividend is paid (and is also after the record date)."
The website "Understanding Dividend Dates" says that for stock dividends, spinoffs and extra large cash dividends, the ex-date "occurs not before the record date, but after. In fact, the ex-dividend date is not even before the payment date! By rule, the ex-dividend date is one business day after the payment date."
As with any distribution, the ex-date for this one is very meaningful. That you refuse to understand it is not.
"people do not understand the value of the spinoffs and are confused by the ex-dividend date (which is irrelevant in this case)"
The ex-date is not irrelevant. It's the only date that determines who gets the spinoff and who doesn't. Perhaps you're thinking of the record date.
"I think that means is you need to buy them on the 10th and hold unto spinoff. Anyone else buying them after the 10th will just simply get cashed out."
No, it works the way I've described earlier in this thread. It's the way spinoff have worked for decades. Nothing new or unusual about it. If you do a search for "understanding dividend dates" and click on the top return, then scroll down to "Dividends of 25% or More of a Company's Stock Price" it clearly explains the due bill process that applies to this spinoff.
I don't see how it could possibly be understood, considering that it's incomplete. Without key details, it's just a confusing mess. But it's no different than the communications of the majority of companies in the same situation. They issue the least information they're required to but it sure would help those who've never seen this situation to have more of an explanation.
"You should inform the company because if what you said was true, they just set themselves up for one heck of a lawsuit sending that letter."
Really? A lawsuit? Are you absolutely, positively sure?
Gosh o gosh o golly!
It's obvious you're going to believe what you like instead learning how it really works, but for anyone else reading this thread, what I said is true. There are plenty of sources to confirm that. Here's just one. From the SEC's website: " Sometimes a company pays a dividend in the form of stock rather than cash. The stock dividend may be additional shares in the company or in a subsidiary being spun off. The procedures for stock dividends may be different from cash dividends. The ex-dividend date is set the first business day after the stock dividend is paid (and is also after the record date).
If you sell your stock before the ex-dividend date, you also are selling away your right to the stock dividend. Your sale includes an obligation to deliver any shares acquired as a result of the dividend to the buyer of your shares, since the seller will receive an I.O.U. or "due bill" from his or her broker for the additional shares. Thus, it is important to remember that the day you can sell your shares without being obligated to deliver the additional shares is not the first business day after the record date, but usually is the first business day after the stock dividend is paid."
And that just happens to agree with what the company says in its March 26 press release.