RE: More Dillution in BMO...for $200M EServer
Post #22809708
https://www.stockhouse.com/bullboards/viewmessage.asp?no=22809708&t=0&all=0&StartDir=O&StartID=22812648&StartDateTime=2008-03-24
“In essence, BMO avoided crystallizing losses and will be proven right if credit spreads tighten over the next five years and/or North America avoids a deep recession,” in which case it could probably even reverse some of the writedowns it's already taken, Mr. Hardy wrote. “It will, however, suffer greater losses down the road if BBB-rated bond defaults surge to record levels.”
CIBC World Markets analyst Darko Mihelic wrote in a note to clients that the restructuring is a positive development. “On the surface, we view this development as positive for the company as it should help to alleviate much of the concerns regarding the potential for an equity issue stemming from possible further material writedowns in the immediate future.”
My earlier post of a G&M article identified a couple concerns (see above). Your recent posts regarding the possibility of recession in the US and well, the equity issue speak directly to PERKINS,_TARA's concerns.
Ok, so if Tara's article is correct and if a recession hits, then what of the SIV's mentioned above?
Next, the perferred shares... This Teir 1 capital? If so, just how much debt can they put on the books due to the extra 250M perferred offering? If you use a 7% Teir 1 to debt then they could take on 3.5B debt? a 9% Teir 1 to debt, 2.77B debt?
All above... speculation... I'm not a banker... Do we have a banker on the thread? Please comment and correct my errors. I do own BMO and hope in the long run it goes up... Cause... I'm currently under water!