Okay this is the part where we do your home work for you, AGAIN...
Preferred Shares generally pay a dividend, but they don't have to pay a dividend. It depends on which class of preferred shares they are from the company's standpoint. Your mistake is that you are lumping all Preferred Stock into the Participating Preferred Stock category. The Preferred Shares used for the Harbour Townhomes acquisition were a new class of preferred for PBLS that are basically a form of Preferred Equity Redemption Stock.
But just for your education (and trust me, this is the only time I will do your DD for you), here are the terms of these "PERC shares" taken from the recorded Deed of Sale...
"In consideration of this sale by Harbour Townhomes LLC to PBLS LLC grants to Harbour Townhomes LLC the following options:
First Option:
Phoenix Associates Land Syndicate Inc herein grants to Harbour Townhomes LLC the option to purchase Four Houndred Thousand shares of PBLS LLC Preferred Stock with a Par Value of Ten and No/100 ($10.00) Dollars per share for a total of Four Million and No/100 ($4,000,000.00) Dollars. The price of said option shall be Ten and No/100 ($10.00) Dollars. In the event Harbour Townhomes LLC or its assignees shall have the right to “put” any or all of the shares of PBLS, LLC after (5) years and PBLS LLC shall redeem/purchase any or all Preferred Shares “put” by the holder for Ten and No/100 ($10.00) Dollars per share; or
Second Option
Phoenix Associates Land Syndicate Inc. herein grants to Harbour Townhomes LLC the option to convert fifteen (15%) percent of the Four Hundred Thousand shares referenced in “First Option” of PBLS, LLC Preferred Stock into PBLS LLC Common Stock in any one year, beginning one year from November 22, 2006, up to Four Hundred Thousand and No/100 Dollars ($400,000.00) Dollars shares of PBLS LLC Preferred Stock. The price per share shall be the price of PBLS, LLC Common Stock posted on its stock exchange, as of the date of the notice exercising this option however in no event shall the option exercised if PBLS LLC Common Stock is less than .03 per share sent registered United States mail postage pre-paid."
Harbour Townhomes took 340,000 of the 400,000 PERC shares for compensation, because unlike you, they believe that PBLS is a growing, cash rich company. Thanks for trying to help correct my mistake though. Whatever alias you use, like Chicken Little, the sky is always falling because of these "evil" preferred shares to you. This will be the ONLY time I waste my time and I respond to your cynicism. I only respond for the sake of my friends who you so try to confuse. My friends here can see that PBLS and Harbour Townhomes believe that within 5 years, the common share pps might exceed $10, which is why they offered the second option.
Maybe my professor asked leading questions, but at least he knew somewhat of what he was talking about before he opened his mouth and convinced everyone that he was a fool.
Fire away with your smoke and mirror answer now. It will merit no more responses from me.
(Friends, please forgive me for coming off so arrogant with this Charlatan.)
Ren
"Experience: that most brutal of teachers. But you learn, my God do you learn." C.S. Lewis
www.younglife.org
