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Non-Tech : Cendant Corporation (NYSE:CD) -- Ignore unavailable to you. Want to Upgrade?

To: Benkea who wrote (1614)	8/18/1998 12:11:00 PM
From: Apakhabar	Read Replies (1) \| Respond to of 3627

It's no surprise that Cendant is not performing well while the S&P is on a tear. When the mood is bullish, investors want to jump on the best blue chips that have in recent weeks come down to more acceptable buying levels. So Cendant, still dogged by potential dilution from the ABI deal, gets neglected. Conversely, when the S&P goes in the toilet, like last week, money flowed into Cendant because it looks like a value play or safe haven. What Cendant needs to do is finance the ABI merger with cash raised from selling non-performing CUC "assets", to minimize the dilution. Until this happens the price will remain, IMO, below 19. But it shouldn't even dip under 15-- unless they can't modify the ABI terms and look inept in the process. Personally I don't think buying back shares is a good idea any time soon. Cash should go to ABI at this point-- it prepares a better tax situation than buying back shares.

To: Benkea who wrote (1614)	8/18/1998 1:19:00 PM
From: Larry S.	Read Replies (1) \| Respond to of 3627

Wren, I believe on 2/16/01, the preferred is manditorily convertible into common i believe. If one does not convert, then one has a preferred stock that is no longer convertible and would lose its premium. i have the prospectus, and will try to clarify this. larry

To: Benkea who wrote (1614)	8/18/1998 9:26:00 PM
From: Wren	Read Replies (1) \| Respond to of 3627

Benkea, you asked why in my post (#1611), I said CD would likely lower the dividend rate in 2001. I have not read the prospectus on CD.I. My assumption that CD might lower the dividend in 2001, was based on the following reasoning: Some companies issue preferred stock to raise cash. Sometimes the preferred is permanent. Generally today though, a newly issued preferred has a way for the company to retire it. Usually by a callable feature after several years. On the call date, if circumstances make it desirable to eliminate the dividend, the company can call the stock and pay off the holders. Preferred dividends are not tax deductible to the issurer. Therefore, most companies do not use preferred stock to raise cash, they issue debt because interest is tax deductible. A company might call preferred stock if its credit rating has improved so it can borrow money to pay off the preferred. This action will convert a non-tax deductible dividend to a tax deductible interest payment. I believe CD issued convertible preferred instead of debt to keep its credit rating high. Instead of a callable feature, they built in a feature into the preferred that will let them force the preferred holders to convert to common if circumstances make that advantageous to the company. If, in 2001, interest rates are favorable and CD's credit rating will allow debt to replace the preferred, CD can simply reduce the dividend rate (assuming the prospectus allows this). A lower dividend rate will cause many preferred holders to convert to common.