Box Ships Inc (TEUFF)

[munhoi]

the amount of unpaid preferred dividends is not a sufficient problem to keep the company from rebuilding and is included in the balance sheet of the company as a liability but it is an issue


they would only be a problem if the company was in BK and subject to the cram down provisions of the BK laws -where they have priority over the common but outside of BK - the common has priority over the preferred as the preferred have no voting rights and therefore the common still controls the company

the company has no real debts or senior debtors so the dividends will cumulative and remain unpaid until the operating margins can resume those payments

however no doubt the preferred is still an issue here since the CEO owns most of it and can use it against the common - so yes they are the Achilles heel of the common due to the CEO wanting the company for free

the CEO is always on both sides of every transaction since he owns Neige International Inc the CEO's financing entity that owns the preferred and does unsavory deals thru it

so no I am not discounting the concerns that the preferred can cause

the preferred cannot supersede their rights over the common as it currently stands

its the remaining overhang on an otherwise clean balance sheet