Lanesborough Real Estate Investment Trust V.LRT.UN

Will debentureholders take the poisoned bait?

[merriam]

I think that this is a bad deal for debentureholders.  Voting no looks like the best option to me.  Are insiders doing this out of the goodness of their hearts in order to kindly improve the prospects of debentureholders?  Personally, I doubt it.

Here are some thoughts.  If you have any contrary views (or notice any errors), please share.

• debentureholders are being asked to voluntarily take an inferior position in the hierarchy of payouts (in the event of a bankruptcy, secured debt, which the debentures presently are, rank at the top; equity or shares rank at the bottom and often (usually?) get nothing)
• debentureholders are receiving no extra compensation for subordinating their position--in fact, they are being asked to pay 5 cents for shares that are presently selling for 1.5 cents:  an immediate loss of 70% of nominal value
• the shares to be received risk not just going to a ½ cent, but I believe that they have a high chance of becoming untradeable (with no bid and an ask of $0.005/sh)--if so, risking a 100% loss
• I wonder if this offer has been structured to create the impression of a false dilemma:  accept this inferior offer or, if you reject it, get nothing in a bankruptcy.  I can think of countless other possibly arrangements that would be better for debentureholders than this one.
• I suggest that debentureholders can do better than this offer and will almost certainly do better, if they reject it.
• The status quo (the way things stand now) is a much better option for debentureholders than this proposal, in my opinion.