Scottish Re Group Ltd Perp Pfd (SKRUF)

[h_man_investor]

The reason there hasnt been any comments on the pros and cons is because it's kind of a silly question.

Pros:
- if you have a lot of shares you have the ability to sell without pushing down the price
- you are getting a price that is significantly higher than prior trading seen in years

Cons:
- decreased liquidity because float will decrease
- you do not participate in future appreciation

Clearly there is value in the preferred or else the company wouldn't do the tender offer. The question is when will these be worth $25- my answer is 4-5 years which is a 10% IRR.

The company will also book a gain on the discount which will increase the book value which will increase the value of the company.

The company can currently pay dividends- they are no longer in breach of any covenants. But they choose not to and they will not pay a dividend before they need to.

When will they want to pay a dividend? Before they try and pay a special dividend to the equity which they now own.