Replies to post #477394 on Fannie Mae-No Politics (FNMA)

[HoldenWalker99]

Here's "how" it could happen, not saying that it will or should...

Let's say that I have $100,000 par value in FNMA preferred and the plan is to convert 50/50 common/preferred.

I get $50,000 common stock and $50,000 preferred stock.

If warrants are exercised after I convert to common stock, my $50,000 becomes $10,000 (diluted 79.9%), and I end up with $60,000... or 60% of par.

[bradford86]

As a preferred shareholder, the class of preferred would need to vote 2/3 in favor of converting to common at bad terms OR we get to keep our preferred.