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Strategies & Market Trends : Value Investing

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To: CusterInvestor who wrote (41505)	2/23/2011 4:07:37 PM
From: Jurgis Bekepuris	1 Recommendation Read Replies (1) of 78535

They don't have to "extend" C, since it is a perpetual convertible. They might not call it though. This is good from the yield-to-call point of view. However, the premium is going to go away by Dec 2012 anyway, since after call date there is always a risk of call at any time. (Some people may risk buying callable security at premium, gambling on no call. If so, any premium is just icing if you want to sell...) The issue of additional pref shares is somewhat neutral to pref holders. Issue of more senior debt would be negative, issue of common would be positive. ;) Issue of prefs is a negative to common holders even though there is no dilution. The company still pays 10.25% on every share issued. Sucks the cash like there is no tomorrow. ;) Of course, who cares about cash, it's reserves that matter. :P If Evans can charm rating agencies and fixed income folks enough, he could issue lower coupon pref and call all the C's. That would be a coup for common holders and would suck for anyone holding C's. Disclosure: I hold some MHR-C. I may buy if it drops to par soon. I will sell if the premium goes to 26.X.

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