This is what would happen if the juniors were redeemed for cash. In a conversion event, no cash leaves the company so no cash gets written down. The junior pref stock lines would go to zero, but what I believe would happen to balance it out would be an equal increase in the paid-in capital line.
The junior pref stock line in the balance sheet is a positive number, by the way. Entering a negative number in equity and a positive number in cash unbalances the books.
The conversion happens because it costs the companies no cash, and issuing new prefs raises cash towards a recap. This is why I believe it will happen, even if the Moelis plan isn't implemented. It makes too much sense: it raises capital and doesn't cost any. Redeeming them does the opposite, so I don't believe it will happen at all.
That's assuming that a no-dilution release is even possible. I see no reason to believe it is. Anchoring yourself to an unrealistic scenario is what is causing all this incredulity.
I totally agree. What's nice in this case is that we have the ability to be on the side of the big money.
The stars are aligning here, Tim Howard even recognizes it. You can stand on the shore and shake your fist at the coming hurricane, or you can evacuate and pick up the pieces when you return.