Simple Example of "permanent capital" financial 101Company ABC issues 1,000,000 prefer shares "A" at par of $25 with dividend rate of 3% + 5yr rate, plus $1 for my purchase of one common share.
Company balance sheet now has:
Assets: Cash $25,000,001
Liabilities: $0
Equity: Prefer Shares A $25,000,000..... Common Share $1
Now, Market goes Crazy and drops the share price of the A's to $5. Company does a NCIB and buys all the A's for $5..... So it cost the company $5,000,000
Company balance sheet now:
Assets: Cash $20,000,001
Liabilities: $0
Equity: Common Share $20,000,001
I just made $20,000,000.
See how it makes financial sense???? And you haven't even factor in saving on dividend payments to the prefers.
All just my opinion/view/thinking/guessing/understanding