As I've said before, if there is not a sale and the MM and Cerberus mezz equity are converted after 6 1/2 years, the common stock will be worth something- again, in 6 1/2 years.
My guess is that this is your first experience with any convertible security. The conversion price means nothing except when the stock is "in the money." Until then, most converts are just senior subordinated debt- WITH CLAIMS SENIOR TO COMMON STOCK HOLDERS. In this case, its not senior subordinated debt, but preferred equity.
I have the feeling that you beleive that cerberus and MM are going to try and get the stock price to $4 that way the investment is worth something. Let me run this scenario by you: they sell the company for $600mm which is a multiple of book value and discounts future earnings on the book of business. How much of that do you think you would get? How much do you think MM and Cerberus would get?
And i'd slao argue that after trying to sell the NA business and couldnt a change in control event look MORE likely because they may be buyers.
"The only way they can renegotiate the terms of this deal would be to buy out the current common shares outstanding." This makes no sense. Why would they want to renegotiate? To get a better conversion price? That's not the way it works- if they want to pony up more $$, they can buy more convts at a conversion price of basically nothing. By the way- that would be bad for you because you would get diluted EVEN MORE. Your points really make no sense. Sorry!
