Quote:
Originally Posted by Fbone
Not unexpected. B&N can not afford those terms. They will have to borrow money to pay the dividend.
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No; they cancelled the dividend since end 2010. Much cheaper.
The stock closed at $9.98 ... which is around where it was trading shortly before the Liberty Media offer was put on the table in May.
Liberty Media's 12 million preferred shares pay 7.75% annually regardless of share price; and if/when the share price trades over $17, they can swap for common shares, lose the dividend but pocket the capital gains over $17.
In 2007, the share price was trading about $43 so, if it got there again, LM could swap its preferred shares for common shares and pocket $312 million in sheer profit over and above recouping its original $204 million investment.
Could Nook drive Barnes and Noble to those heights? Tidy profits if Liberty Media has been on the right side. In the short run, their $204 million investment earlier this week is now worth $120 million ... or about $45 million loss
per day.
As I posted earlier in this thread ... ouch.
