Lanesborough Real Estate Investment Trust V.LRT.UN

Debentures are paying full interest

[alkhor]

I thought I would dip my toe in and bought some debentures at $1.8 per $100 worth as the price was low even if LRT.UN went to $0.005 after conversion. I found out why it was so low. Little did I know I would be charged another $75 in interest payments per $100. After a few minutes of sheer panic, I managed to resell them on (at $1.805) so it is someone elses problem. I'm only out $4 because of the trading fees. 

I'm trying to get hold of my broker to make sure the interest calculation was right. Until then, they are not even worth $0.01 per $100 worth unless the LRT.UN units trade at 4 cents after the conversion.

[quicksilver545]

What do you mean charged interest? Debentures collect interest, which will be paid out in shares if the proposal is approved.

[alkhor]

When you purchase a debenture on an exchange you pay the seller the price of the debenture plus all accumulated interest. Since LRT has not paid any interest on the debentures for some years, the amount of the interest is owing for all those years by the buyer to the seller. Per the news release, LRT was going to pay about 30% interest in units at the conversion, but my brokerage charged closer to

[quicksilver545]

I'm not sure where you are getting your information, but that is not how debentures work. Buyers purchase units of the debenture to become a debentureholder, in order to receive interest payments at either maturity, or at the arranged interest rate instalment payment intervals. Buyers are not responsible for paying the accumulated interested to the seller, where did you hear that? The company

[alkhor]

I'm afraid I disagree. A debenture usually pays interest twice a year. If the payment dates are June 30 and December 31, and you buy March 31, you have to pay the 3 months interest for January 1 to March 31 to the seller. The buyer than gets the 3 months interest plus the next 3 months on June 30. I've bought debentures many times it the past and this is exactly how it works When I

[merriam]

Who was your broker?  I sold some the other day, through Scotia, and they initially showed that my cash balance had increased by thousands, mostly interest, but on settlement date, they corrected it, removing the interest, and leaving me with hundreds instead of thousands. Over the past few years, it has been trading on an interst flat basis instead of the usual accrued interest basis. 

[alkhor]

My broker has changed my purchase to to exclude the interest today. They haven't changed the sale yet so it looks like I have a lot of extra cash but that will change soon. I thought this was the case but when it showed the purchased costing an extra $70,000, as I said I paniced. I felt lucky to only lose $16.

[riverrrow]

Been there, done that.  I know exactly how it feels.  Panic is putting it mildly.  GLTA.

[alkhor]

Now that I know the interest is not charges I decided to dip my toe in again, buying $50,000 worth at $1.26 per $100 worth at a cost of $640. Per my calculations, at the conversion I will receive 1,000,000 units plus 320,000 units in interest for a total of 1,320,000 units. At $0.005 per unit after the conversion the units I own will be worth $6,600. Risk is the bid could be 0 with the ask at $0

[alkhor]

Decided to double down and bought another $50,000 worth at $0.76/100. We'll see soon if it pays off.

[riverrrow]

Where else can you by $50,000 for $500.  GLTA.

[alkhor]

$389.95 to be exact