RE: RE: MiningMonster/gwplant....Double,
I agree that I don't think the preferreds would get anything in the event of bankruptcy. They are currently operating at EBITDA that is 6x the interest coverage so we are a ways away from the bankruptcy conversation.
Anyone that is gonna hold the C and D forever is crazy since we don't have visibility with YLO even management isn't giving guidance let alone holding perpetual preferreds which is a leveraged bet on the success of the company in the very long term.
If you take a step back from the MRQ restructuring they are in decline but not doing too bad top and bottom line even. So personally im willing to take a risk on the company at these levels after being hit with the forced selling from being dropped from the TSX 60.
Please see for yourself, but the best way to play the shares is through the series A preferreds which have exhibited a temporary discount to their intrinsic value.
In March 2012 the ylo.pr.a will likely be converted to common on a 12.5 to 1 basis:
.75 x 12.5 = $9.375 valuation. I used .75 since that was the price at 4pm Friday before MOC. Also you will receive 1 or 2 dividends, end of Sept and December, in the amount of
.265. So $9.375 +
.53 = intrinsic value of A preffered of $9.905, currently trading around $8.50. So there is $1.40 or so of free money on the table in the A preferreds. Yes it is free money, you can short YLO against the series A and take the spread for free. I am not doing this, only buying the A share outright, but just clarifying for those that will say its not 'free' because of all the risks blah blah....
Some C and D holders and company employees will probably yell at me but do the homework yourself, the smart money will move into the A shares since its the safest place for your capital in YLO. Aside from debating the merits of the company in general, it is hard to argue that the A shares are not the best relative value among all the securities of the company. Good luck you guys do your own homework and it pays off. Cheers