No. It means that it would be in the best interest of the preferred shareholders to wait until the PPS is as high as possible to profit as much as possible. If they sold at that price they would break-even.
They won’t be profiting until the PPS is above that. To maximize profits they would want it as high as possible.
Let’s say the pps went to .10 and they decided to convert, that would be .085 profit per share. But with the 5% annual dividend it serves as incentive for the lender to stay in as long as possible and allow the pps to grow until the pps is much much higher.
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