Replies to post #11781 on American Airlines Group Inc (AAL)

[robvo]

Let me explain about the distribution:



-At the day of the merger 3.5% of your shares will be converted to AAL using the formula AAMRQ = 1.582 x LCC - 22.96 (this is the corrected formula). Those are the only shares available to trade. Rest of the shares are locked.
- 30 / 60 / 90 / 120 days after merger, 25% of your AAMRQ shares will be converted, using the same formula, into AAL shares. The price of LCC (AAL) for that calculation, will be the average volume-weighted price of the last 5 trading days before the day you get the new shares.

22.23 is the value that, using the formula, gives todays closing price of AAMRQ 12.20. In other words, if you think AAL will be below 22.23 in the 120 days following the merger, you should sell now, otherwise, keep your shares. I have no doubt that AAL wont trade as low as that, in fact, we should see 26-28 during that period.