5 Responses to “November 1, 2019”

1. skeptical says:

   November 2, 2019 at 12:07 pm

   Not the best place for this, but an interesting story about Pengrowth.
   https://business.financialpost.com/commodities/energy/pengrowth-energy-to-be-acquired-by-cona-resources-for-740-million
   So debtholders will be made whole and shareholders get pennies.
   Where would the preferred stock holders rank here, if Pengrowth had any?
   Assuming Husky goes through this (not likely at all given their strong position, but hypothetically), how would the preferreds fare?
   I assume that since common stockholders are getting something, means there’s room to get something for the Preferred shareholders, perhaps everything common stock holders are getting.

2. stusclues says:

   November 2, 2019 at 12:46 pm

   Simplistically, if the shareholders get something then the preferred shares remain whole. That can mean they get redeemed at par, stay extant (even if the acquirer is private – see Capstone Infrastructure CSE.PR.A), or be made subject to an (probably abusive) offer (see lots of commentary at Prefblog re RONA for example).

3. skeptical says:

   November 2, 2019 at 1:21 pm

   Simplistically, if the shareholders get something then the preferred shares remain whole.

   Possibly, but not necessarily. Let’s say Pengrowth had 100 million in preferred stock and the offer was for $740 million debt and $50 million for equity. In that case, preferred stock holders would only get $50 million and common get zero.

4. stusclues says:

   November 2, 2019 at 1:40 pm

   Right. $101M for equity in your example means $1M for commons and $100M for preferreds unless the preferred shareholders agree to something different.

5. jiHymas says:

   November 2, 2019 at 2:03 pm

   I see from the Pengrowth press release that:

   The proposed transaction (the “Transaction”) is to be completed by way of plan of arrangement under the Business Corporations Act (Alberta).

   In the PPL / KML Plan of Arrangement, there was initially no provision for a preferred shareholder vote, which was later amended to include a vote regarding whether KML preferred shareholders wanted to retain the shares of KML or exchange them into obligations of PPL, with no influence on the actual change of control.

   I don’t believe they could be bought out at less than par without either a bankruptcy or a shareholder vote; but if the company was run down, they would be put in the place of Aimia preferred shareholders.