It is so much better to have insiders selling in offerings at prices greater than those at which the company first offered shares. The reason? Insider selling does not dilute the shareholders!
Some "haircut" this is!
"Climb every mountain,
Swim every sea,
No price is too great
To pay for chuuuuuuuuuuy!"
Dear Members of the Board of Directors:
As was disclosed in a Schedule 13D filed on November 1, 2013, Lonestar Partners, L.P., an investment fund advised by Lonestar Capital Management LLC (together, “Lonestar”), owns 3.0 million shares of common stock of Lee Enterprises, Incorporated (“Lee,” or the “Company”). Lonestar commends the Company’s management for generating stable EBITDA and cash flow in a difficult industry environment. The Company’s advertising sales efforts, digital initiatives and ongoing cost reductions have allowed Lee to deleverage at a rapid rate. Lonestar believes that Lee’s prospect for further deleveraging is bright because
*** blah blah blah, and then, finally ***
We believe that the Company should be able to raise $650 to $700 million of true first lien. Given this, we feel that the Company should pursue a financing alternative that includes raising a minimum of $125 million of subordinate interests, with the expectation that this subordinated financing could be achieved concurrently with a refinancing of the existing 1st Lien Agreement. We continue to believe that the Company and its financial advisors would be successful in raising such financing.
We ask the directors of the Company to use the current window of accommodative capital market conditions to refinance its entire capital structure in a way that reduces cash interest expense and rationalizes collateral arrangements. Doing so will maximize value fully for all shareholders.
Lonestar Capital Management LLC
*** Just 'cuz they want interest expense to be lower doesn't mean it will happen. ***
The share price may be relevant now if the company is going to sell equity. Would it be 400M shares at $1.875 or 375M shares at $2, for example?