I would like to ask some questions to Carl R., jubimer, Zeev, or Mike re: redeemable preferred, for my own enlightenment:
1) First, and most basic, what are the differences between convertible preferred and redeemable preferred stock? In both cases, it seems that the holder has the opportunity to convert his preferred stock to common stock.
2) From financial statements:
Pursuant to an agreement in the second quarter of 1998, the Company completed the redemption of the Old Preferred Stock in exchange for the following securities (a) 3,000,000 shares of its Class A Common Stock, par value $0.01 per share (the "Class A Stock"); (b) 10,000 shares of a new series of 8 Noncumulative Convertible Preferred Stock, par value $1.00, with an aggregate liquidation value of $20.0 million (the "Convertible Preferred Stock"); and (c) 21,859 shares of a new series of 8% Noncumulative Redeemable Preferred Stock, par value $1.00 per share, with an aggregate liquidation value of $43.7 million(the "Redeemable Preferred Stock").
In (b), the par value is $0.01 per share for the 10,000 shares, but the aggregate liquidation value is $20,000,000. Does the "par value" mean anything in this case- I thought that par value for preferred stock represented the price paid by the holder to the company, but this cannot be right in this instance. Is the low price paid a reflection of the fact that this is actually refinanced debt? Also, how is the liquidation value determined?
Thanks in advance for any information you can provide.
I am in a risk-averse mode, and sold off my net stocks, although a 10-15% correction from here would strongly tempt me to get back in. AXC is now my major holding; don't see too much downside from here. Funny to some ears, no doubt, but AXC is now one of my "safe" investments (compared to PCLN and its ilk). |
