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h_man_investor

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h_man_investor

Re: Enterprising Investor post# 1620

Tuesday, 08/24/2010 7:09:30 PM

Tuesday, August 24, 2010 7:09:30 PM

Post# of 1731
Yeah- they have 6 more years. Their conversion price currently stands at $4. You said book value is $2.31. Why would they settle for a mandatory conversion that destroyed value for them?

You say "absent liquidating the business or giving up control, conversion will occur." That's a BIG detail you're skipping over.

I'll say what you said the opposite way and let me know what you think:

"Absent a mandatory conversion, the company will be liquidated or sold." Totally different outcome.

They will try their hardest to sell the company before the conversion. It's simple to buy a company in run-off- you simply discount the expected cash flows and you finance the purchase.
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