"will try to stay alive and management pay itself. Feel free to disagree and in that process make numerous mistakes"
will try to stay alive and management pay itself and in that process make numerous mistakes. Feel free to disagree.
I am not disagreeing with anyone here. My first post was that this offering implied lack of faith on equity by issuing a hybrid instrument that is closer to a bond pushing equity further down. It is also possible that these holders are doubling down shortselling.
On a different note I stated that most business will exhaust every possible measure before ch.11. A survival instinct for corporations as an extension of the human instinct. Unless there is a negotiated deal for most parties by which ch.11 is the best prospect. Other than this, even the worst companies in the worst scenarios will try to stay alive and management pay itself. Feel free to disagree and in that process make numerous mistakes. Just my opinion.
For as long as the company operates these shares will continue to pay indefinitely and there is nothing management can do. Whereas bonds party ends when management decides or at maturity. To eliminate a perpetual a restructuring is required. There is no such a thing as calling a bond to be replaced with new financing. These perpetuals stick. They are like cockroaches, indestructible. What is difficult to understand?
If they go belly up everybody loses. Nothing is bullet-proof. If the company stays these are winners. Their only risk is very high inflation/interest rates. And yes, you MUST assume the company will be in business for a long time otherwise what is the purpose and goal for starting one? The vast majority of businesses will fight tooth and nail to survive. Or are you thinking that most companies go public seeking bankruptcy within a few years?
Bonds have maturity date. These dividends are infinite. At a substantially high yield they will remain a great deal for a very long time.
"There is absolutely NO economic sencs for anyone to buy the prfd."
On the contrary. These preferred shares have a lot of built-in protection. The holders *will* get paid one way or another. And their money will come out of equity.
"Preferred shares are not debt - it is equity and dilutes shareholders."
The way this has been set up, these preferreds are closer to a bond than anything else. And -in general- preferred shares are not equity as they do not have voting rights and are not part of shareholders' equity. Preferreds are quasi-debt that sometimes are closer to equity (like when non-cumulative dividends or convertible) and sometimes are closer to a bond like in this case. There is no dilution here. This deal puts equity one or two notches below. And the reason the company offers this, is a statement on how they feel about the common share. They are not giving it much value or making it any more attractive.
This financing puts equity at risk by lowering its status one notch. Or a couple. The fact that they are not convertible means they will never be part of equity (common). They are also cumulative. Therefore if the company ever stops paying them out the dividends will accrue. Finally, perpetual means their redemption claims are forever, including non-paid dividends. The company is placing a roadblock in the capital structure weakening common shares.
This is not a friendly deal for common stock and whoever is behind it (bankers, etc.) that will acquire these shares seeks to make a statement (much further protection) against common shares.
With the residual management from CT.
Finally!! Our own new message board. I was missing the old CT. Hopefully, some of the old posters will come back. BXMT becoming a large and larger player.
Component shortages is the most common excuse of incompetent management. I should have had discipline last Q and unload. When hearing "shortages" always run for the hills. The new excuse for these crybabies is "competition". Where's the punishment? Stock options are only manna from heaven.
1. What is your time horizon? How soon will you need the funds?
2. I think we are approaching a rarefied environment. I am lightening up a bit.
This may serve as a guide. Even if NES is a decent play.
Another one: PRTS. A shareholder group got involved and publicly pressed the board to fire the CEO and/or sell the company. PRTS was horribly managed with the CEO taking the wrong course. The activist shareholder was minority. We need someone with a large stake to speak up and press.
Look at OCLR. Even worst #$%$ than this one. With even worst management at the helm. Wait until a big one gets involved here, like Goldman did in OCLR about a year ago. It took some time, but the honcho was forced out *elegantly* and the stock jumped 50% next day and never looked back.
The story here is the same that was there, bad management without real vision and with no apparent desire to work for shareholders. NVTL in comparison is in much better shape than OCLR was/is and has much better industry prospects.
FTK always trades this way. Could be a program. It is always late to drop and late to recover. Could also be a mark down (inducing sales) by MMs trying to replenish inventory before the stock firmly turns up. If VIX breaks 24-26 nobody escapes correlation. Other than this, what TM said.