DOMINION CITRUS INCOME FUND T.DOM.UN

A good trade

[Aspertheoldman]

Since the beginning of the year I had accumulated 12,000 pref shares of DMN  at an average price of $1.25.

I sold them today at $1.72.

It was a win-win situation for both the buyer and seller;

I made a 37% profit in 2 months.

The buyer made an investment that will give him a 10% internal rate of return.

 

I am wondering why they do not offer a choice between cash refund over 6 years on one hand and $2.50 worth of the units of DOM.un on the other.

[ob1knob]

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;

[pmac2015]

One reason why I think they would not offer that is that it wouldn't be beneficial to the majority holders of the preferreds. If the majority holders were to take all stock than it would take them a really long time to sell off that position. And the share price would drop significantly in the meantime from the dilution and selling. So the reality is that the non major holders are really

[GoldenGun]

I kinda hope the unit shareholders approve the deal because otherwise it could force a bankruptcy and everyone loses. To me the preferreds are getting less than the $2.25+accrued interest, but if they ask for more, they will get much less than the deal offers. I think the meeting will result in approval of the deal. Is there anyone out there against the deal?

[Aspertheoldman]

Dominion can pay in stocks It owes about $2.5 million. It could redeemed the pref with about 10 millions units. Actual book value of Dom is about 2.1 million and the book value per unit is about $0.10 (21 millions units) After redeeming the pref the new count of units would be 31 millions (50% more) AND the new book value would more than double to 4.6 millions (because its liabilities 

[ob1knob]

Blair is a director? A major shareholder yes I can see this but when did he becoem a Director? At the AGM I thought he was just a shareholder and I thought he had the intention of remaining just a shareholder? What I not read?

[ob1knob]

https://www.dominioncitrus.com/investor_management.php   No mention of Blair as a Director on the company web page?

[Aspertheoldman]

He is not a director (chairman of the board) since december 8, 2011. Sorry for the previous misinformation  

[pmac2015]

I just don't see how the company is teetering that close to bankruptcy. I can't see how they wouldn't be able to put some sort of financing transaction together that would honour the initial claim of the preferreds.

[Aspertheoldman]

I totally agree with you

[ob1knob]

IMHO, Blair is a smart man.    I've not checked SEDI to confirm that he has purchased a pile of trust units but if he has.... then my guess is that he thinks that the trust units is where the money is at long term.

[ob1knob]

"I can't see how they wouldn't be able to put some sort of financing transaction together that would honour the initial claim of the preferreds."   The preferreds are defined as part of the capital structure for one corporation, the Trust Units represent a different corporate structure.   The "Trust" would have to make an offer to "Buy" the