My value of the preferreds, and why I supported the offer... I think it is not a straightforward matter to value the preferreds. Much of their argued value depends on unlikely contingencies such as dividends being declared. The company has stated numerous times that it "does not intend to declare any dividends for the foreseeable future." In my opinion, the most tangible and significant feature of value in the preferreds is their right to be converted into common shares.
This conversion feature is easier to value--presently, it would be half the value of a common share, although this ratio gets progressively worse each year. The common shares last traded at $0.45, so the conversion feature would support a price of about $0.23. Historically, the preferred shares have fairly consistently traded for something less than their conversion value. Myself, I have never deliberately purchased them for more than this.
This is why I see the proposal as fair. The proposal conversion ratio is twice the shares' regular conversion ration. A double of the inherent value sounds more than fair to me. I would even call it generous.
Another point to consider when judging the merits of the offer is that the common shares issued upon conversion under the proposal are significantly better than those that would be issued if you just converted normally. If you convert using the built-in conversion right, you receive common shares with a market value that is suppressed by all the remaining, unconverted preferred shares. If the proposal is passed and you chose the offer's conversion option, you will receive better common shares than you ordinarily would, as these common shares would be unfettered because there would be no preferred shares left to subordinate them. These common shares would be worth much more, in my opinion, because of this unfettered nature.
A third reason why I would accept the plan is that I also own common shares, and I think that this proposal would result in a significant rise in the value of my common shares.
A forth reason is that I have dependents who rely on me, and so I am a little more risk adverse than I was, and I can see the wisdom in accepting a bird in the hand now rather than holding out for the two that I think are in the bush and that I may or may not be able to catch some day.
Regarding the perceived lack of a firm justification for the $0.50 option, I tend to agree, but I believe that criticism of this option and the $0.50 value is a red herring. In my opinion, it is not the best option--there is a better one on the table--so why fret over it? The better option is to take the common shares which I believe would shortly be worth over $1.00/sh and would likely be worth up to $5.00-$8.00 over a reasonable time frame.
So what is not to like? My existing commons would go up significantly. My preferreds would convert to more commons at a very favourable ratio, and they would go up. Win, win.
Anyway, this time, I'm not saying this to try and influence how people vote--I'm just sharing my opinion because you asked. I think that most people will have voted already, if they are going to vote at all, and regardless, it seems to me that the signs are pointing to a management loss on this one (unfortunately).
Win or lose, I do see this proposal as a step in the right direction. The partial debt repayment is another positive move. These efforts deserve encouragement, in my opinion.