It makes sense that it trades at around $17....
$2.25 times 8.5 shares = $19.25 .... market prices looks right for merger.
" Upon a change of control, holders of Series C may convert into common shares (maximum 8.50340 shares of"
chatgpt
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?? Key observations & meaningful differences - The coupon (dividend rate) is slightly lower for Series C (7.875%) versus Series B (8.00%) and Series D (8.25%).
- All three are perpetual preferred shares (no fixed maturity) and cumulative (dividends accumulate if not paid).
- Redemption rights differ slightly by series: for instance Series C has a redemption date “on or after October 15, 2022” while Series D has “on or after April 18, 2024”. Series B also has its own redemption timing and conversion rights cap.
- Conversion rights: For Series B and Series C, the firm disclosed maximum common shares issuable per preferred share in a change of control event. For example, Series C up to 8.50340 shares of common per preferred share. These conversion ratios may result in holders receiving value less than the liquidation preference (i.e., $25) if the common share price is low. Fintel
- Voting rights kicking in if dividends are in arrears: Series C explicitly states that if distributions are in arrears for six or more quarterly periods, holders can vote for additional directors. That implies a governance trigger which might give a premium or protection. Series B has similar voting rights under its charter.
- The fact that Series D had a later allowed redemption date (April 18, 2024) may mean it carried somewhat more favourable early-call protection (at least until that date) compared to Series C (which had earlier call possibility).
- The slightly higher coupon for Series D reflects that it might have had slightly weaker terms (or was issued later/higher risk) vs Series B (8%) and Series C (7.875%).
- Because all series have the same liquidation preference ($25) and structural category (cumulative redeemable perpetual), the differences in market price likely come down to: coupon rate, redemption call-date risk, conversion features and liquidity / investor perception.
?? Why Series C (SOHOO) might trade worse Given the structural table above, here are plausible contributors to why Series C is trading at a deeper discount:
- Its coupon is the lowest of the three (7.875%) meaning less compensating yield compared to Series B and D before risk.
- The redemption call date (“on or after October 15, 2022”) means the Company has longer flexibility to redeem—or more precisely, the call-option may be more favourable to the issuer (they can redeem when they choose). This creates call risk for the investor (i.e., that their high interest will be taken away). Investors value that risk negatively.
- The conversion rights: Whereas both Series B and Series C have conversion rights, the number of common shares per preferred for Series C (8.50340) may give less value than anticipated if common stock trades low; the market may perceive a higher risk of “value less than liquidation preference”.
- Liquidity perhaps: if fewer investors trade SOHOO, the bid/ask spread might be wider, pushing price lower.
- General market sentiment may treat series with slightly weaker terms (lower coupon + earlier redemption risk) as lower in the hierarchy of preferred risk/return.
? My conclusion From the structural terms perspective, Series C is slightly less attractive than Series B and Series D because of its lower coupon and arguably less favourable redemption/call features. That structural difference is likely a material contributor to its weaker market trading. In essence: investors demand extra yield (or price discount) to compensate for the higher risk embedded in Series C.
If you like, I can check the prospectus supplements (for each series) to extract full detailed terms (including conversion price, change-of-control definitions, call premium, redemption timing) and we can put them side-by-side for full transparency. Would you like me to pull those? |
