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Atpg preferred

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September 05, 2012 – Comments (2) | RELATED TICKERS: ATPGQ

I received this notice from my broker the other day:

"09/04/12 16:54:50
THE DELISTING OF THE COMMON STOCK OF ATP OIL & GAS, CUSIP 00208J108, HAS
TRIGGERED A FUNDAMENTAL CHANGE EVENT. AS A RESULT OF THE FUNDAMENTAL CHANGE, THE CONVERSION RATE HAS INCREASED TEMPORARILY TO THE RECEIPT OF TWENTY (20) SHARES OF COMMON STOCK FOR EACH ONE(1) SHARE OF PREFERRED CONVERTED."

Offer is good through 9/12/12
"


I also read this in the prospectus:

 

In the event of our voluntary or involuntary liquidation, winding-up or dissolution, each holder of Series B Convertible Preferred Stock will be entitled to receive and to be paid out of our assets available for distribution to our shareholders, before any payment or distribution is made to holders of Junior Stock (including our common stock), a liquidation preference in the amount of $100.00 per share of the Series B Convertible Preferred Stock,

 

So here is the question.  To tender or not to tender.  Personally I own 600 preferred shares (my lost 2012 vacation money). If I accept the conversion I will have 12,000 common shares.  I really don't care that I might be able to recoup an extra few hundred bucks by converting and selling.  I have written the loss off.  However if in the event that the company does make equity holders at least alive, I doubt seriously that that 12,000 common shares would ever be worth more than the 600 preferred.  According to the prospectus at least I have to get $100 a share before the common gets 1 penny.  

 

Think I will keep my preferred.  Just curious on any other holder's thoughts.

 

2 Comments – Post Your Own

#1) On September 06, 2012 at 2:58 AM, somrh (88.64) wrote:

I considered buying when it hit sub $10. I'm glad I didn't.

I'd probably want to do some more research to see if there's any insight to how bankruptcy will proceed. Do you think assets will get sold off or will they just restructure bond holders so that their share becomes part debt part equity?  Will preferred get any treatment in a restructuring? 

Like I said, I'm glad I didn't pull the trigger on this one. I suspect I would probably just hold on to the preferred's and hope for something (or liquidate now and cut my losses). But I'd want to follow up. 

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#2) On September 06, 2012 at 11:04 AM, awallejr (85.50) wrote:

Anything can happen in BK.  Mentally I have written my shares off, but I don't see why I should convert at this point.  If I have a shot of any recovery it would be with the preferred better than the common since the preferred will survive if the common survives and it could still survive if the common doesn't.

In theory if the company stays intact with no restructuring by some turn around miracle then the upside potential on those 12,000 common shares would be greater than the preferred.  But I would be a very happy puppy if the preferred ever maxed out to a $90,000 value.

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