Biggie, I think that the value of the of the Argentinians' investment will not grow without their taking some risk. They have been protected on the way down by the changing of their conversion rate. Blackham said that he thought the return on the mid-range hotels had a good delta over the cost of capital so that the being able to raise capital was a key factor. Converting the class c preferred would allow some more borrowing which would increase earnings which would allow CDOR to pay dividends, raise capital and make everyone happy. I think that Elsztain is torn between actually sacrificing something for the common good (anathema) and saving the company and his ego. Time is against the status quo. The company's cost structure is that of a much larger company. The company either needs to get larger or cut its overhead dramatically. There is a value (and a cost) of being a public company. The cost of reporting, etc. is very high for a very small company. The value is the ability to access the capital markets. CDOR is suffering from the cost of being public without being able to benefit from the value.
CDOR is headed for delisting. It can avoid bankruptcy for a long, long time by continuing to not pay its preferred dividends. The only hope of reviving the company is for the Class C preferred to be converted. With that base, new capital can be raised and the plan of becoming a growing owner of mid-market hotels can proceed.
Net proceeds from the sale will be used for general corporate purposes and future acquisitions. Has Condor ever thought of paying its preferred dividends?
The only hope for Condor is for the Class C Preferred shareholder to convert its shares to common stock. If those shares aren't converted none of the other preferreds will be converted. The common stock will never be worth anything unless it can pay a dividend. It can never pay a dividend until the preferred dividends are taken care of.