STUDENT TRANSPORTATION INC 5.25 PCT DEBS T.STB.DB.A

RE:Why not pre-announce the change for tansparency?

[borne2run]

Paul, some comments on your post and the most recent from goldsternp.

1.  My guess is that management just decided to make the change to US dollar denominated dividends within the last few months (after seeing all that red ink from hedging activities).  Going forward, there will be a 90 / 10 split in revenues between U.S. and Canada.  In the past, I think it was closer to 80 / 20.  So, there are a number of factors that all came together within the last six months.

2.  In my opinion, the equity raise was done at the right time - the stock price was at the top end of its range and it is best to raise equity when the market is good, and not when you have to.  If they had waited a month or two, they probably would have had to issue at least 5% more shares.  The increase in shares is another reason for lowering the dividend - management will want the new dividend to be sustainable.  They would get blasted if they had to lower it within the first year.

3.  As far as book value is concerned, I now think it is largely irrelevant.  STB provides a service and at the end of the year the only thing that really matters is free cash flow. Management expects cash flow to increase by 5 - 7% per year over the next few years,  That should translate into dividend growth of about 5% per year, but I wouldn't bet the farm on it.

I bought a small postion (< 2 percent) about a year ago for an income account and exited shortly after the announcement of the bought deal.
If the stock stabilizes at current levels, I may buy back part of my original position. 
The Caisse De Depot (Quebec Pension Plan) owns a large position (~ 8 million shares).