For those that have not seen the news apparently Franchise Group (FRG) may be going private.
FRG has a 7.50% cumulative preferred outstanding FRGAP.
If the company goes private they may or may not file SEC reports–they may or may not keep the preferred listed. This is not known now.
The preferred shares are trading at $22.52 now.
This ‘heads up’ is simply to remind preferred holders to weigh their options.
Users who liked this:
Thanks for the heads up Tim. Liquidated a small position in one account. Simply don’t need the hassle.
Tim,
If they go that route, wouldn’t their preferred be delisted from the Nasdaq and holders would have the protection provided in the ‘Delisting Event’ section of the prospectus? Seems like preferred holders would have the option to cash out @ $25/share if that occurs. My thought is that management would not want to pony up the money to redeem these preferred shares so they will continue to provide financials in order to avoid a large number of shareholders from requesting payout.
‘Upon the occurrence of a Delisting Event or Change of Control, holders of the Series A Preferred Stock will have the right to convert some or all of the Series A Preferred Stock into our common stock (or equivalent value of alternative consideration’
-Chris
Chris, The prospectus does have some protections so screwing over the preferred holders like BX is not as simple and clear cut. It appears we could all convert our preferred to common which then creates a lot more common shares for the buyer to deal with. So their offering price for the company will be lower then what existing common shareholders probably expect as they know they will have to buy the preferred as well.
Chris–a firm maybe on that . I simply do not trust them to not try to wiggle around their commitments—I have none of it, but if I did I would be out and invested elsewhere–don’t need ‘potential’ hassles. My heads up is just to make sure everyone is in the know and can determine their course of action. Thanks for the input.
Hi Chris and others,
Please help me understand what happens if the Preferred shares are delisted
Thanks
Gary
Thanks for the heads up. I look into my crystal ball and say, “Ouch, a possible double whammy coming.” A take-under and yet another delist.
I feel like I am running an orphanage (An institution devoted to the care of children who, for various reasons, cannot be cared for by their biological families. The parents may be deceased or absent. )
You mean FRGAP ?
Thanks Someone–yes–will correct.
Thanks for the heads up, Tim, exited our two holdings with modest losses, just don’t want to live with the uncertainty. Best of luck to those who ride out whatever changes come down the line.