Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Icebrg who wrote (38360)	2/26/1999 8:08:00 AM
From: Big Dog	Read Replies (2) of 95453

Re conv pref shares. It like buying options on the stock but getting paid interest while you wait to exersize and not having any decay due to time value and not paying any premium. Plus even if the stock price doesn't come to the convert/exersize price, you still get your money back. Great for the buyer, not so good for the seller (issuer) since they are basically pre-selling equity, paying interest and diluting common shareholders. Someone might comment as to the security position of a conv. preferred in the event of a bankruptcy. Where do they stand in line with bond holders? The big variable is the convert price and the interest rate. I suspect that the lower the interest rate, the lower the convert price, and vice versa. From a common stock perspective the dilution on conversion can't be a pretty thing. IMHO, a company that issues conv preferred is saying to hell with the shareholders... big loosbrock.com

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