UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35367  
Subject: Re: Preferred shares below callable price Date: 2/27/2013 10:23 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 4
I understand that extension can be made past 2017 but would those shares get at least around 22$ near the end of the first term?

Read the prospectus carefully to understand what you are being promised. Most preferred shares are forever until called. The call provisions are specified. Hence, you will collect the promised interest payments until the issue is called. And they will be called at the call price--usually $25.

But if the market price is far below the call price, the company can tender for the shares by offering some premium over the market price for whatever shares people are willing to sell. Call is at company's option; shareholder must comply. Tender offer is optional. Shareholder need not accept the offer.

The company needs to come up with the funds to retire the issue. Earning the cash with ordinary business transactions is the easy way. But otherwise, if financing becomes available at lower cost, they can effectively refinance by calling the issue with borrowed money.

If the business is thought to be failing, shareholders will worry about the future and sell their shares, but price will plummet as few will buy shares in those circumstances. That is when a tender offer becomes attractive to the company.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement