Posted by: aleajactaest Date: Sunday, September 14, 2008 10:38:43 AM
In reply to: Doma who wrote msg# 171025 Post # of 171033
Hi doma,
The "we" isn't really a plausible alternative. It's pretty rare for a community of shareholders to have any success banding together and dictating terms to a company and its Board. Especially when those investors' shareholdings are individually a tiny proportion of the total. A Carl Icahn-type intervention can work only because he, individually, can buy enough equity to be a thorn in the side of management. No Wavoid has a holding of that kind.
I call it the Saddam rule: the company almost always receives over 90% of the votes, even if shareholders are being asked if the earth is flat. We do, of course, have our own exception to the rule - the options brouhaha - but even then, when we essentially saw a huge attempted land grab on behalf of the employees, management and Board of the company, a sizeable proportion of the posters on this board was in favour, as they will be in favour of almost anything the company decides to do.
An argument can be made that the issuance of preferred is preparation for a declaration of bankruptcy. The holders have a preferred claim on the assets of the company. [This argument rather depends on who the buyers were and whether, if they are independent of the company, they might be induced to sell their interest if the company went belly up].
An alternative argument can be made that the issuance of preferred gave away something minor (dividend/interest) for a period that management presumably hopes is very short in return for selling stock at a conversion rate equal to the current price.
Of course, this isn't necessarily an either-or scenario. I'd hedge my bets for the moment and suggest the preferred offering appears to suit both outcomes. |
