| Title: | Market Investing |
| Moderator: | 2155::michaud |
| Created: | Thu Jan 23 1992 |
| Last Modified: | Thu Jun 05 1997 |
| Last Successful Update: | Fri Jun 06 1997 |
| Number of topics: | 1060 |
| Total number of notes: | 10477 |
I own some stock in a company that is considering creating and selling some class B common stock, non-voting, to reduce debt and such. Essentially, it will result in something similar to a 2:1 stock split, so the newspaper says. My questions are this: What benefit does creating a "class b" stock give the company? What about the shareholders? Why would an investor want to buy "class b" stock, which is non-voting, over buying voting stock? Does this action increase or decrease the value of my holdings? I'm assuming that a lot of this should be spelled out in some proxy which I haven't received yet. Is this a valid asssumption? Thanks, John Piekos
| T.R | Title | User | Personal Name | Date | Lines |
|---|---|---|---|---|---|
| 452.1 | SDSVAX::SWEENEY | Patrick Sweeney in New York | Fri Apr 16 1993 10:30 | 28 | |
Benefit to the company
They get the cash without the obligation to repay a bank or a
bondholder. (same as any stock offering)
Benefit to the shareholder
Voting rights are not diluted by an offering of non-voting stock.
Motivation for buying non-voting stock
It's less expensive because the market places a value on voting rights.
However, dividends and in the event of liquidation, the proceeds, are
distributed on an equal basis.
Marketing impact of the offering
New stock typically depresses the price for a while until that market
can digest whether getting the extra cash was worth it. It all
depends on the size of the offering. An offering that adds 10% to the
shareholder equity is different from one that adds 100% to the
shareholder equity.
Disclosure
The offering is described in a prospectus. Typically current
shareholders have "preemptive" rights, namely to buy the stock ahead of
the public. Contact shareholder relations at the company.
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| 452.2 | DSSDEV::PIEKOS | Zoo TV | Fri Apr 16 1993 10:37 | 3 | |
Thanks for the details, Pat. John Piekos | |||||