Let me just ask this question:
1. How do we know that brigade capital is not long pfd and shorting the common? They could be shorting the common to drive it lower and lower in order to radically increase the dilution in any future restructuring since the lower the common price, the more shares needed to be issued to note holders and pfd. Many of the 2009 owners of common also have positions in surplus notes and pfd so they don't lose that much. Nol's will be abandoned in order to appease regulators.
How do we know the Ny insurance regulator doesn't want sca sub to get loans from sgi to cover new potential losses in the muni bond sector? I know in actuality the losses are low probability, but try to explain that to the regulators. Management will then have the ability to write new business ,hire more people , increase their salaries. Regulators are happy with the increase in reserves and note holders and pfds are happy too. Only people unhappy are the common holders, but are we going to go to court in Bermuda? Issue 500 million new shares to pfds , surplus note holders at 50 cents per share. Then reverse split 10 to 1. Management will just say that regulators forced their hand and they could only not pay on the pfd and surplus notes for so long. If dilution not approved they could claim they would be put in rehabilitation for lack of capital as result of being forced to set aside excess reserves by regulators.
2. There was lot of volume in the two days the stock went from 1.1 to 1.35.
Then everything went quiet and the stock drifted lower all the way to 55 cents. This is could clearly happen again.
Just wanted to serve this softball up there so Denny and others could knock the pitch out of the ball park before the holiday weekend?
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