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They would have to tender an offer in order to buyout which would be voted on. Keep in mind that management I assume hold more voting power even if all shareholders converted, so the fact that the preferred shares have voting power is moot. If management likes the deal, they will vote to take it, regardless of what you our I think. I assume with a buyout though, the offer tendered would include them cashing out your preferred shares.
I think that basically that is how it would work, but mind you I am not involved in that line of work. Worst case scenario for the ones that converted is "I think" that you get the $10 per preferred share before a dividend is paid out or less than the 5 year sum. So basically you would be getting paid .08-.104 cents per common share. It is not a "bad" deal, even if the share price runs higher. You still made a profit if your average is below the sliding scale of .08-.104 cents.
The risk taken by commoners in not converting is that they decide to beat the commoners into submission to take the deal by continuously diluting to keep the common PPS low. I do not mean by selling into the open market necessarily, but by handing out these shares unrestricted to "acquisitions" which down the road to keep the float high. As people get disgusted and sell and/or convert, they can continuously buy slowly on the open market and pay out the preferred until they own all common shares and take it private. Just a random thought, I do not know if it is possible, but it seems possible.
The risk that unconverted commoners take on the upside is that we upilist or become fully reporting and the share price skyrockets.
The best thing for each shareholder to do is to do what you are comfortable with. If the deal gets to a number I have set in my plan to convert, I would do it and not think twice. I am still willing to risk it at this point and now have till the end of November to decide.
From some discussions on other boards and from what I have read in the SEC rules, I believe that the company must become fully reporting just over 3 years after they meet the threshold of 10 million in assets. According to company PR's that threshold has been met since 2004 and would require compliance shortly after the end of 2007. I personally believe they included Pit assetts in 2004 that they do not actually own because of the lease, so I am under the impression that by at least shortly after 2008, we will be at that point.
That means that by that time, they must either sell off assets, go private or be taken over.
All just my opinion.
Regards,
Fizzlegig
