No. of Recommendations: 2
RAS has a slug of debt coming due next year that has been seen as a problem, but management always indicated that they felt confident they could deal with it.

Then, when the stock price is around $3.30, they announce a sale of convertible debt:

RAS agreed to sell $100 million aggregate principal amount of its 7.00% Convertible Senior Notes due 2031 (the “Notes”) in an underwritten public offering. The conversion rate will initially be 390.1677 RAIT common shares per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $2.56 per common share).

So right there the pricing is $.74 under market. Given that the loan holders collect interest until a conversion, and have better position in a bankruptcy if bankruptcy occurs prior to conversion, the discount on the value of the share is more like $1.00/share.

I cannot see any way that this makes sense. They had better options: rights offering to existing shareholders, sale of assets, etc. RAS got taken by BofA/Merrill Lynch is how I see it.

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