RE:RE:4.05 @ 4.2% vs 3.80 @ 6.0% I think anyone that would have asked... would you be okay to sell shares at $4.05 and pay an effective after tax rate of 3% on the debt portion? you would take this day all day long.
And if I said, that you bought those shares for 1/2 that price 18 months ago, you would be pounding the table to do the deal.
Now, then why would an institution buy a stock at 4.05 when they can buy it at 2.73 today? And the annual coupon payments don't even cover the difference. That is a good question.
I think part of the answer lies in the fact that to buy a $10M stake in the company you would effectively pay much more given the lack of liquidity. There was only $2.5M worth of shares traded yesterday.
IMO... This is incredibly attractive financing terms for an unsecured debenture.
It does suggest optimism for the future if institutions take all of the offering and the over allotment... which is actually more expensive than buying the common equity at these levels.