Dilution of commons and market Cap I read with interest the discussion around dilution of commons in the event of conversion of preferreds and wanted to throw something out there for discussion.
Shouldn't the dilution already be factored in for the following reasons;
When the preferred's are issued, the market naturally adjusts the common share price to compensate for dilution due to increased obligation to all shareholders,
Market Cap should include the relative impact of all outstanding shares therefore it shouldn't matter whether there is 1 preferred or 12.5 or 13 commons, the end impact is the same.
The BOD can not create shares out of thin air, therefore conversion either comes from issuing of existing shares to replace preferred, or the creation of new shares through a "refinance with a similar instrument". This possibly might require approval of regulatory bodies, BOD, Voting shareholders etc.
Thoughts?