RE: A good trade 12K shares @ 1.25/share over the last couple months for a non liquid stock and where the risk of the future value was in some peoples minds (my mind) very low. I guess if you had faith or something telling you that the perferred shares had value then it was a low risk game to play.
The other side, the person picking up those shares @ 1.72 gets what you say is an internal 10% rate of return; however, the prospect of receiving this fantastic rate is again weighted with risk. If it was a GIC, it would be paying maybe 2%. Again, the person taking the risk gets the reward. With luck, the'll get full value.
The option of swapping the Perferred shares for Trust Units I don't see as workable. I believe it provides the perferred share holders with an un warrented opportunity to acquire DOM.UN units at much to low a price.
The deal as it now stands provides for little coupling of things. Ya got the perferred shares, hold them and net a defined reward. Buy the Trust units on the open market and take the chance of apreciation of unit value due to underlying business performance.
If by some chance Dominion manages to start turning a profit quarter/quarter, pays the interest and principle of debts defined and has something left over to pay the Income Trust and in turn the Trust Unit holders (the construct as it is defined) then those Trust Units should over time start trading at a highter price.
It is my thought that Dominion can do more profitable business. Allowing the Perferred share holders the ability to slip in and gain a significant "Equity" position of the Income Trust is not right. Back when the Perferred shares were issued, the ones who bought thought the'd get a deal on the distribution of profits. Didn't turn out that way.... Now, letting them re-deploy capital from Perferred to non liquid trust units? Nope... Not IMHO a smart move for T.DOM.UN directors and management to think about. Dominion Trust is a going concern. In 6 years, the'll have taken care of this mess of Perferred. Directros facilitation based on the here and now not looking at the trust as a going concern is undermining their duties.... Ya?