Post by
mayorkgh on Nov 24, 2015 10:06am
Conversion of preferred shares
When the the preferred shares were issued in September 2010 (proceeds of US$10 million) and 2011 (proceeds of US$5 million), they carried a fixed cumulative dividend of 8%. Conversion was set at 1:1 basis. In the event of conversion unpaid dividends were to be paid in cash on the 17.2 million Class 3 preferreds (no issuance of shares to pay this) or in shares on the 10.9 million Class 4 preferreds. As at September 2015, the Company could elect to redeem the Class 3 preferreds for US$0.58 per share plus pay the accrued and unpaid dividends, in common stock. The Class 4 preferreds fell under the conversion provisions whereby unpaid dividends were also to be paid in common stock. It would seem therefore that the Company (for all practical purpose the same thing as the majority of the preferred shareholders) chose to redeem the Class 3 at he first possible opportunity and convert the Class 4 at same time, thereby foregoing the 8% dividend but accumulating even more common stock at a very attractive price. That's my take!
Comment by
lscfa on Nov 24, 2015 10:12am
The pref holders did not forego dividends. They were given additional shares of common stock to compensate.