With respect to dividends and distributions upon the liquidation, winding-up or dissolution of the Company, the Convertible Preferred Securities rank in priority senior to the Company's common stock and to each other class of capital stock or series of preferred stock (where the terms of the stock do not expressly provide that it ranks senior to or on parity with the preferred stock) and on parity with any additional Convertible Preferred Securities and any other class of capital stock or series of preferred stock. Convertible Preferred Securities each have a Conversion Price of $18.00, which may be adjusted upon the occurrence of certain events.
This is directly from the 8-K and I'm wondering what could be construed as a CERTAIN EVENT. Perhaps the stock going below $18 a share and nowhere in the filing does it state that BAC can't short the company to nil in addition to making this investment. I can tell you from experience working in companies with heavily issued preffered stock that it gets the preferred their money back at the expense of the common shareholder even in liquidation. I'm sure BAC knew there would be a pop on the stock due to people thinking the pressure was off of the company. Good time to get some of your money back shorting with 140million share trading volume at levels up to 50% or greater price than the preferred issuance. This is referred to as the common practice of "Death Spiral Financing".
Although the best of faith in companies and people would lead one to believe that this is not practiced, this is business and banking and they are only in the business to make money at all possible costs. I don't think they are going to cover their shorts and take the profit. They will take the Loan Servicing group during the firesale.
I’m not saying you’re wrong as I can’t be 100% sure obviously but I have put money on this theory so if I am wrong I will pay dearly for it. Only time and money will tell.
