RE:RE:RE:FFN Extension All that matters is the number of shares that are tendered into the retraction - the price is completely irrelevant and does not impact the NAV in any way.
In order for a consolidation to occur, more preferred shares have to be tendered than Class A shares because then there would be more Class A shares outstanding than preferred shares. The best way to balance out the number of shares would be to consolidate the Class A shares to reduce the number of those shares that are outstanding.
For instance, if the number of Class A shares outstanding is twice the number of preferred shares after consolidation, they would have to consolidate the Class A shares at a ratio of one for every two shares to reduce the number of shares outstanding by 50%.
Splitfunding wrote: Ah I see, thank you for the clarification. It was incorrect of me to assume a consolidation would have had to been mentioned at the same time they announced the extension.
So if I understand this correctly, suppose the preferred shares were trading at say 10% below par ($10.00) at the time of redemption, which would be $9.09, the difference in would be taken out of the NAV? And if the NAV was $15.00 at the time, with $5 covering the class A shares, now there would be only $4.09 going towards them and that would resulted in a share consolidation ratio of about 1.2 to 1?
Somehow I get the feeling I'm wrong about something there... In any case, as you noted the preffered's are safely trading above par with a fair bit of margin.