RE: RE: RE: RE: RE: RE: RE: RE: RE: RE: RE: Silent " the cost to Yellow Media will be the tax on almost $250 M which is much better than paying the full amount.."
Absolutely
"Under this scenario the only way for Yellow Media to shift the tax burden to the shareholders would be to get the YLO sp to increase before conversion."
That is true, but there is another way to avoid the tax and to not shaft you and also not pizz of the creditors. Try this scenario on for size. The following is just 'Rainy Saturday afternoon' discussion, so just take it that way.
YLO's main problem is the threat that they may not be able to handle the debt. Now either they can or can not. They will probably offload the Pref's to gain a little breathing room and please the creditors, but with a straight offload they will incur a tax burden. There is an answer that would please all. Offer to the Pref holders a conversion to the common as stated, but also offer a promissory note to make up the difference in 10 years time.,,, What does this achieve?
You are off their books as a pending debt. The creditors are happy because 10 years is outside their debt window. YLO saves on the taxes because they have maintained full value as a liability on their books.
If they sink, then it does not matter. You got what you expected in the first place and they saved money on taxes from not writing off capital liability. If they fly, you have a payday coming...and the creditors are happy either way because you are just plain out of their face.