Are there any specific number re conversion? Otherwise, it must refer to the international portion of the debt which is 19%. So perhaps it is not a huge deal.
I do not think its is mechel related or the agreement. All steel is flying. Nue posted strong numbers as well as STLD. Then, the news of massive closures in China. I believe it is hot coiled steel prices recovering worldwide in 2016.
"Dilution makes your shares worth less."
You got that wrong. Although that may be the market's response a secondary makes you own less of a more valuable company, so it's a wash. It will all depend on how they use the money raised.
Don't forget: you are bringing in capital and your balance sheet changes. You own less of more. And in the case of Tesla, a secondary will make your shares worth even more!
If your short thesis is based on dilution and they raise cash for growth.. careful.
You are imprecise yet you'd like to sound sharp.
The SEC filing states "debt securities" among other instruments to be used. It is very specific. Debt securities are corporate bonds or similar instrument that carries an interest. From there all the way down the scale to common shares.
I imagine their financial dpt. knows better than you. Since they aren't raising capital tomorrow and this seems like an open filing perhaps they will issue a bond when cash flow improves.
Point is dilution is not bad per se. Only if the capital raised is used for their salaries. As opposed to put it to work.
markmath is correct.
They aren't doing a secondary. They are simply being prudent and opening the door for raising capital. It could be anything from common stock, to debt to warrants. So claiming dilution is wrong. Dates are unspecified which means there is no urgency. This is a good move to improve their balance sheet down the road.
Anybody wonders how all this happens? Clearly, investors did not return just like that. Someone turn on a switch at 2 pm and the buying started. Then, that last trade out of nowhere taking the stock price to $2. It's all funny if it weren't real manipulation. #$%$? Meanwhile, someone dropped some breadcrumbs to the preferreds in the last minute.
Presumably, this will rally for 4 weeks to a breakout point. If deal closes and is equity friendly, we break out. If not, we fail. Same for preferreds... presumably.
The best way to judge sustainability of payouts is to assess FCF (operations) less all possible distributions including capex, dividends itself, etc. If the resulting number is positive the dividends are safe and are paid out from operations.