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It looks like the cap is only on the preferred debt which is only part of the debt. We shall see after the 5 day VWAP what they give us.
JML
oldnick As I recently said the cap is only on the preferred part of the debt. If you look on aa.com .. investor relations .. equity distribution you will see 2 pdf files.
Preferred Stock Conversion Calendar - Updated 3/3/14
Certificate of Designation
The certificate of Designation defines the cap. The other document Preferred Stock Conversion Calendar shows the distributions to preferred so far. If you look at the past week in that document you will see the conversion price is capped at $33.808 for the "Conversion Price".
JML
oldnick the cap is in the equity distribution documents on aa.com and it is $33.808. That is the 96.5% discounted number so the actual stock price cap is $35.0342.
JML
j4turbo,
As the price of the stock goes up the number of shares that the preferred receive decreases when they hit the cap the number of shares stops decreasing. The shares don't disappear they just do not go to the AAMRQ shareholders above the cap they stay with the preferred.
The shares in excess of the cap is for calculating the distributions to the AAMRQ shareholders not the preferred. The base of the formula for calculating shares to AAMRQ shareholders does not include a cap and the part about "less the shares in excess of the cap" in the AAMRQ formula is where they include the cap in the AAMRQ distribution.
JML
Blind Mellon The conversion cap is on the preferred shares part of the debt. It only caps some of the shares going to the debt holders. The extra shares that the AAMRQ common are receiving are coming from the shares that the debt holders are not getting due to the share price increase. So if there is a cap on the preferred shares then there is a partial cap on the AAMRQ shares.
Below are the two sections that talk about where they get the excess shares due to the cap and how they treat those shares. 1.148 is how they calculate the shares that AAMRQ shareholders will receive at each distribution. In that description we see
"less (ii) the Shares in Excess of Cap" this is where they remove the shares that are in excess of the cap from the shares that AAMRQ would receive.
I have a formula from stoxxer on yahoo that worked on distribution 1 and 2 and I have broken out the preferred with the cap and the non-preferred debt. If we stay at $37 it shows between .182 and .1836.
1.148 Market-Based Old Equity Allocation means, with respect to any
Mandatory Conversion Date, the aggregate number of shares of New Common
Stock that New AAG shall ratably distribute (or reserve for distribution) to the
holders of Allowed AMR Equity Interests on such Mandatory Conversion Date,
or as soon thereafter as reasonably practicable, in an aggregate amount equal to (i)
the product of (a) 25% of the difference between the New Common Stock
Allocation and the Initial Old Equity Allocation, multiplied by (b) the amount (if
any) by which the VWAP for such Mandatory Conversion Date exceeds the
Value Hurdle Price, all as multiplied by (c) the reciprocal of such VWAP, less (ii)
the Shares in Excess of Cap for such Mandatory Conversion Date; provided,
however, that in no event shall the number of shares distributed and/or reserved as
described in this Section 1.148 with respect to any Mandatory Conversion Date
(x) be less than zero or (y) be equal to or greater than the number of shares that
result in the aggregate number of shares of New Common Stock that are issuable
pursuant to the Plan, including those that are or may become issuable upon
conversion of shares of New Mandatorily Convertible Preferred Stock issued
under the Plan, exceeding the Maximum Plan Shares.
1.147 Mandatory Shares in Excess of Cap means, with respect to any
Mandatory Conversion Date with respect to which 96.5% of the VWAP
calculated with respect to such Mandatory Conversion Date exceeds the Preferred
Conversion Cap, a number of shares of New Common Stock equal to (i) the
number of shares of New Common Stock issued upon the conversion of all shares
of New Mandatorily Convertible Preferred Stock that are converted on the
Mandatory Conversion Date, less (ii) the number of shares of New Common
Stock that would have been issued pursuant to the conversion of all shares of New
Mandatorily Convertible Preferred Stock that are converted on the Mandatory
Conversion Date if the Conversion Price (as defined in the Certificate of
Designations) was not subject to the Preferred Conversion Cap, which, for
purposes of this clause (ii) shall be a number of shares of New Common Stock
equal to the quotient of (x) the aggregate Stated Value of all shares of New
Mandatorily Convertible Preferred Stock that are converted with respect to such
Mandatory Conversion Date, divided by (y) 96.5% of the VWAP with respect to
such Mandatory Conversion Date. In no event shall the Mandatory Shares in
Excess of Cap for any Mandatory Conversion Date be less than zero.
DustyD10
The 5th distribution if we have one will be small and is from the disputed claims reserve fund. MY guess is between a .02 and a .05.
It could take a while to settle all the disputed claims (6 months). They could also distribute those funds as they discharge them or distribute the discharged ones in the 120 day distribution.
JML
emohre, As long as AAL stays above $35 the 90 and 120 day distributions should be around .18 maybe a little higher depending on the price of AAL. If we go to AAL @$40 we could see .185 due to the cap only being on the preferred shares part of the debt.
I am planning on .18 if we stay above AAL $35.
JML
oldnick here is the modified stoxxer formula.
(((35*749.5*0.685)/2-4341)/394.2/35/4) + (((AAL*749.5*0.685)/2-3695)/394.2/AAL/4)
AAL @$37 .183
AAL @$40 .188
JML
NEVERMIND oldnick I need to work on the formula some more its not working correctly. If I figure it out I will post it.
JML
oldnick You might be right about the price cap is only on the preferred. So the preferred is about half the total debt. I changed the formula that worked for the last 2 distributions from stoxxer on yahoo board and if we go over $35 I am seeing
AAL @$37 .189
AAL @$40 .203
Won't know for sure how close this is until the 90 day distribution.
JML
oldnick,
The CAP helps the preferred. It stops the reduction of their shares as the price goes up. The preferred will convert to common at around .75 not matter how high the price. It doesn't help AAMRQ common.
JML
j4turbo
No that infers a .180 for the 3rd distribution if AAL stays above $35.
JML
oldnick
aa.com investor relations .. equity distribution
Preferred Stock Conversion Calendar - Updated 2/14/14
This is the VWAP for the optional conversions for Preferred shares.
JML
Equity Distribution Price CAP
So the cap is finally showing up today.
5 day VWAP 35.0710
96.5% of the 5 day VWAP is 33.8435 which is what the conversion price would be without the cap.
The conversion price on the chart is $33.808 which is what we said the cap was.
From aa website investor relations equity distribution.
JML
Jmb0173 I have changed my thinking on the last one due to the high 60 day distribution. I think we will get 90 Day .18 and 120 .180. Then we could get another small one from the disputed claims reserve maybe a .03.
So I am hoping for a .76 in the end.
JML
90 day distribution .180 due to conversion price cap.
JML
So far the employees have only received 27 million shares.
From Jetnet: More Shares on the Way for U.S.-Based Legacy American Employees
February 6, 2014
Dear Colleagues,
We’ve shared before that the majority of U.S.-based legacy American employees are eligible to receive 23.6 percent of the shares of common stock in the new company (AAL) distributed to holders of allowed unsecured claims. As of Jan. 10, American has distributed approximately 26 million AAL shares to eligible U.S.-based legacy American employees.
We are excited to share there will be a third distribution of approximately one million shares to certain U.S.-based legacy American employees. Eligible employees will be able to sell or transfer shares beginning Feb. 10, though they may see their shares in their accounts under “Employee Grants and Awards” as early as Feb. 7. As a reminder, these shares will be available to eligible employees in their Computershare account, which is available by first logging into their retireonline.com account with J.P. Morgan.
It’s important to note that because this is a small distribution and because the company can only issue a whole number of shares, not all employees will receive shares and for those who do, the distribution will be smaller than the initial distribution.
I am questioning that now. It seems they are not handling the optional conversions the way I thought.
We got more this distribution than what I was calculating and we will get more the 3rd distributions so they are coming from the 4th distribution it should all add up to about the same.
more 2nd and 3rd and not a big 4th. I would rather have them now.
JML
Ralph There is a cap at $35. The largest we get will be .180
4th distribution will be .18 or below if we stay above $35.
JML
bobfly,
The $25 example was old analysis. We know final numbers on debt and common share counts. We are well past $25.
1000 AAMRQ shares x . 1572 = AAL 157.2 shares
You need to use your total AAMRQ share count now with the .1572
JML
60 day VWAP 33.9001 my guess is .1572 to AAMRQ
JML
Distribution Dates
Go to aa.com -> investor relations (bottom of page) -> Equity Distribution
Look for Mandatory Conversions.
JML
gofurman,
Yes that is still my estimate. The Feb 9th should increase to around .160 due to the VWAP being 33.7875 so far.
JML
Wanekee Look at your schwab account today. I saw the same thing yesterday and it is gone today. They don't know how many shares yet since AAG has not released any numbers. We shall see Friday.
JML
Rocco
aa investor relations equity distribution
1/14/2014 Optional Conversion Re-opens
1/15/2014 Optional Conversion Cutoff Date Reached
FOR RELEASE: Wednesday, Jan. 15, 2014
NOTICE TO HOLDERS OF AMERICAN AIRLINES GROUP SERIES A
CONVERTIBLE PREFERRED STOCK REGARDING OPTIONAL
CONVERSION CUTOFF DATE
FORT WORTH, Texas – American Airlines Group (the “Company”) today provided the following notice to Holders of its Series A Convertible Preferred Stock (NASDAQ: AALCP) (the “Convertible Preferred”) pursuant to Section 5.2 of the Certificate of Designations relating to the Convertible Preferred (the “Certificate of Designations”) (capitalized terms not otherwise defined in this notice have the meaning set forth in the Certificate of Designations):
• As of 5 p.m. EST on Jan. 14, 2014, the Company’s Transfer Agent had received Conversion Notices seeking the Optional Conversion of an aggregate of 36,309,291 shares of Convertible Preferred into Common Stock, which exceeds the Optional Conversion Cap of 10,000,000 shares of Convertible Preferred. As a result, the Optional Conversion Cutoff Date with respect to the second Conversion Period occurred as of that date.
• No Optional Conversion election received after 5 p.m. on the Optional Conversion Cutoff Date or during the remainder of the second Conversion Period will be given effect.
• Holders of the 36,309,291 shares that validly elected Optional Conversion on the Optional Conversion Cutoff Date will not have their shares of Convertible Preferred converted in full. The number of each Holder’s shares will be cut back on a pro rata basis, subject to rounding, such that the aggregate number of shares converted is 10,000,000. Accordingly, each Holder that validly elected to convert Convertible Preferred shares on the Optional Conversion Cutoff Date will have its shares of Convertible Preferred converted on a pro rata basis using a factor of approximately 0.2754 shares converted for each share validly tendered for Optional Conversion, subject to rounding. Any shares of Convertible Preferred not converted will be returned to the Holder.
rocco2 on the aa investor relations equity distribution they converted 10 million on the first day. They had requests to convert over 30 million the limit is 10 million. I think they released an sec document stating that fact.
JML
rcookr1,
It is my understanding that they have a set number of shares they are distributing during each distribution. I believe that number is around 104 million shares.
When the preferred shares convert during the optional conversion those shares are coming out of that 104 million distribution. As they max out the optional conversions that reduces the number of remaining preferred shares. If they max out all the optional distributions the 120 distribution will only have around 4 million remaining preferred shares. Currently they are converting around 41 million during the mandatory 30 day distributions.
167m total preferred shares
10m 1st optional
41m 30 day distribution
10m 2nd optional
41m 60 day distribution
10m 3rd optional
41m 90 day distribution
10m 4th optional
4m 120 day distribution
So since the 120 day only has 4m preferred to convert compared to 41m in the previous distributions the extra shares should go to AAMRQ.
JML
rocco2 why would we see a bump. The 2nd optional conversion was closed after the first day. They maxed it out on day 1??
JML
Remaining Distributions
2/7/2014 Day 60 - Mandatory Conversion Date
3/9/2014 Day 90 - Mandatory Conversion Date
4/8/2014 Day 120 - Mandatory Conversion Date
gofuman
The cap is $35. No matter how high the stock goes above $35 the distribution is based on a max of $35 so those numbers can't go higher.
JML
gofuman,
157 shares on Feb 9 (.1570) AAL $33
166 shares on Mar 9 (.1660) AAL $35
243 shares on Apr 9 (.2430) AAL $35
The numbers can change if they take out more shares to pay union shares and if they discharge disputed claims and do incremental true-ups during each distribution.
Union would decrease the shares to AAMRQ
true-ups would increase the shares to AAMRQ
JML
Bolt13 We will never hit .9:1.
It will be .76 to .82 depending on AAL price and disputed claims reserve.
JML
rocco2,
ON second thought I think I read someplace that they took shares out of our pot to cover the cost of the shares they gave to the union and they may do that again. Not sure if that is what they were talking about on the CC.
JML
bolt13 there is a cap at $35 so a 1:1 won't happen. Stock needed to be at $35 on 12/9 to even get close to a 1:1.
Now AAL @$100 gives us a .90:1.
JML
rocco
No the buyback is from outstanding shares not the pool going to debt and AAMRQ.
JML
ralph.
.241 is only the last (4th) distribution due to the optional conversions.
2 and 3 should be about the same. .151
JML
ralph one more thing the 120 distribution will be higher. I am projecting
@33 .241
@35 .243
without disputed claims or unions given shares.
ralph any disputed claims that are remaining could raise the .162 if we go over $35. When disputed claims are resolved to be invalid those shares will be distributed to AAMRQ shareholders.
JML
ralph,
Yes that is my understanding from reading the bankruptcy plan.
JML
AAL @33 .157
AAL @35 .162
AAL cap $35
These numbers are based on no incremental true-ups from the disputed claims and no distributions to labor union.
JML