RE: Yet Another Comment on the Disposition of the Hi DMR,
I too would love to get $25 for my preferred A shares. However, my general experience is that the hundred-fold gains are relatively few and far between. I like the A's because of favourable conversion possibilities and because an offer could well be made on them as part of an overall restructuring scheme. A decently high offer (over a dollar or so) seems fairly likely since they'd probably try to deal with the C & D holders, who have more negotiating clout, at the same time. I would assume they would make a similar offer to all pref holders to try to be fair.
In addition to the three situations you posed, there are a couple of other possibilities for the convertible prefs that have crept into the mix:
4. Under a CCAA situation, brought about by individuals like Salmon trying to get an unrealistic share of the pie, all prefs could end up worth zero. This is a very possible scenario if any one group refuses to budge, whether it is the MTN holders, the pref holders, the banks, the common shareholders, etc. Of all the various stakeholders, pref A and pref B holders likely have the least clout becuase they are not that high on the "seniority" totem pole and also have no voting rights. Moreover, unlike the C & D holders, they can be converted at any time.
5. With a debt crunch looming, an offer may be made as alternative to conversion since a low offer might be accepted. e.g. company offers to convert or offers a dollar a share (no idea what the offer would, just throwing a dollar out as an example).
I think the probable reasons why a conversion hasn't happened already are:
1. A & B conversion is moot if the MTN holders refuse to budge and force a CCAA situation. It's also moot if the banks don't grant any form of extension on the revolving credit facility next Feb since that also likely forces CCAA. I suspect the company probably wants deal with the bigger fish first (like the sturgeon and tunas) and then get to the Salmon who are relatively insignificant in the scheme of things. They'll build their plans around whatever the big picture ends up looking like.
2. There are probably some smart preferred share holders out there despite the fact that most of those have not found their way to this board. If they get converted to 200 million more common shares, you may suddenly have an organized, intelligent (relatively speaking with some SIGNIFICANT exceptions who need not be named) common shareholder group with some clout trying to exercise their might and complicating negotiations.
3. There is a bit of "playing chicken" and brinksmanship going on. i.e. the closer we get to CCAA scenarios, the more likely pref a, b, c, d holders are to accept a lowball offer to buy them out.
4. There may indeed be some legal complexities related to the handling of suspended dividends. My inclination is to think that this is not as big a factor as 1, 2 and 3. For example, with dividends suspended, could it simply mean that you issue an even 12.5 shares for each pref A and you compensate for the missed dividends if and when dividends are reinstated? I don't think that conversion necessarily needs to factor in the missed dividends until such time as dividends are reinstated across the board. That way, you don't need to worry about triggering payments on the non-convertible series...
Anyway, for all the posts about pref A conversion, I think in the scheme of things, it' not nearly as important as the negotiations with the MTN holders.
Mark