I do know that both the common and preferred holders vote,
but can the preferred holders alone stop the exchange?
Dave, thats a very good question, and I'm sorry but I dont have a definitive answer. It woud be my opinion that the preferred can vote the same as the common shareholders, unless their stock was specifically designated as non-voting. I doubt that is the case.
Thank you for the details on the new conversion offering. I find the amount of money the company must pay away to get this new deal quite astronomical, and it leads me to ask the question that , if they must pay away such an enormous premium to shareholders that already have a vested interest in CDRD, how much are they going to pay away in the future to raise the next 300-400 million dollars that they still need?
I am also at a loss as to how they plan to fund these future loans and convertable preferreds, since CDRD generates a total of ZERO revenues. All they can do, as far as I can see, is borrow from Peter to pay Paul, ie. issue more and more common stock and dilute this issue further.
One interesting point you brought up was the new conversion rate would be fixed at 21 $ or the price of the stock at the time of the switch. Seems to me it would be in the company's best interest then to hype up the stock price as much as possible in the hopes that if the new deal is taken, then the future conversion rate will be at least 21 $.
I remain of the opinion that the current preferred holders will take the money and run. However, if they do go after the new deal, that will weigh heavy on the balance sheet for CDRD in the future, and is just postponing the inevitable, at an even higher cost to current shareholders.......I am patiently waiting for November to see what develops. I have deep pockets for this short trade, and I hope you have also, as I believe ultimately the rewards will be great....best of luck......;^) |
