Protective Capital Structures Corp. (fka PCSO)

[neilhk]

hey that's my style:)

Here's some thoughts.....comments welcome....if I've lost it just let me know ok:)

HCPC needs to find funding for c.$1 billion of real estate that RELM want to purchase this coming year. We think Hotel Financial Strategies (HFS) could be the conduit lender that is able to secure that funding either directly or indirectly. This funding is achieved by HCPC by selling tranches of their 1 billion preferred shares at $1.00 share.

Purpose of Preferred Share offering by HCPC: To fund newly issued Promissory Notes for BCLOC projects (this is according to the recent Florida site filing).

Within 12 months of each transaction/ sale these preferred shares have to be converted into common shares of HCPC.

Each $1.00 Preferred Share is converted into the equivalent of $1.00 worth of commons share based on the average 30 day closing price prior to the conversion. This can happen at any point within the first 12 months. After 12 months it occurs automatically. My interpretation of this is as follows:

Example (for illustation only): Say HCPC Share price is $0.10 (...illustration for now...ok:). $1.00 preferred share would convert to 10 HCPC shares i.e. The dollar value is the same in common shares as in preferred shares. This is a good post from heelsgo1 which shows some of the restrictions on the conversion:

http://investorshub.advfn.com/boards/read_msg.asp?Message_id=27580714&txt2find=preferred

So here's some more thoughts, maybe late here but here goes:)

1. If someone buys $1 billion preferred shares in HCPC that is serious cash. They may be entitled to a dividend but they know that these shares become HCPC commons shares after 12 months. Upon conversion, those $1 billion preferred shares will be worth $1 billion in HCPC commons shares.....same dollar value.....at the time of conversion anyway. Is not the market cap of HCPC going to be worth $1 billion + at least at that point? Or have I missed something?

2. Will the investors putting up that kind of cash not want a cast iron reassurance on their initial investment? Usually when a mortgage lender arranges a mortgage, they hold the deeds/ title of that property, so that if the borrower defaults they can repossess the property. In this instance the BCLOC mechanism is different as it is set up under a Special limited-purpose corporation, however, I'd have thought the parties funding the purchase of the real estate would need to be assured of getting their money back in the event of default. So whether RELM or other borrowers are part of HCPC in the future or not, the title for those properties would be held as security against the loan is some shape or form.

3. To me it looks as though the conduit lender funding the c. $1 billion in real estate (quite possibly to be all RELM owned properties...time will tell) is not only funding the loans, but actually buying into HCPC as well. HCPC must, therefore, by some mechanism be able to hold title to those properties as security until such time as the property/ loan is paid off.

To me it looks like very serious money has been found to not only fund these loans for RELM (presumably with the reassurance that the BCLOC loans are a more secure form of commercial mortgage) but to take a major equity stake in HCPC as well. You would only take a major equity stake in HCPC worth c.$1 billion, if you were also pretty confident that it would be worth much more in future. For that to happen, you would need to be very confident that the pps would be heading north in the future imo. With that the original $1 billion would increase in value.

So at present, Current Market Cap:

7.0 billion x 0.0002 = $1.4 million

If I am right with the above assumptions, to get the market cap to $1 billion + would require a major pps move. Great to hear thoughts on how this would happen and whether an RS could be part of that scenario....or whether I have really lost it completely:)

Carol mentioned in the WallSt,net interview (Sept 20th last year):

http://heritagecapitalcreditcorp.com/Wall_St_net_Interview_GCJ.pdf


"........we plan to merge with a conduit lender to give the company direct access to more capital and different structures. This merger is expected to help us carry out our plan to organize a bank."

This preferred share issue could be the start of that merger process imo:)

GLTA