Here is my take on why the preferred conversion argument is flawed and being stated on the advfn site to mislead naive investors:
The $BCAP preferred share conversion is a poor attempt to manipulate shareholders into selling. Cries of dilution are frivulous when they are based on claiming to know the intent of those with preferred shares.
The argument is ridiculous for the fact that it makes no logical sense from the point of view of the preferred shareholders. Those with preferred shares want to maximize the value of their shares and seek as much money as possible. Converting a large portion of shares would be disastrous to their own pockets. The price per share would likely drop with the pending dilution of a certain magnitude.
Unfortunately, to those that choose to maintain the position that the preferred share conversion will be raining down upon us soon, the Articles of Incorporation are pretty clear about how the conversion can occur. Sure, preferred shareholders have voting privileges, however, the amendment clearly states that the common shareholders can only vote on share structure changes. Right now, none of the preferred shareholders/officers of the company own any common stock. Meaning, the current common stock holders maintain the voting rights to lock the share structure as recently announced. The preferred shareholders can only convert shares if there are any outstanding available. Based on the share structure, there is only about 30M shares available (difference between A/S and O/S counts). Therefore, this is the "huge" amount of shares that could be converted from preferreds if a current preferred shareholder so chooses. This will require written notice, 5 days in advance, so common stockholders would likely be aware when the conversion is happening, if and/or when it is actually happening.
Read the documents yourself and if you need further clarification, contact someone you may know with legal experience or give the CEO a call and ask for clarification.
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