That means the taxpayer would be the last one to lose money, because the non-preferred shareholders would take the first losses.
The preferred shareholders simply do not receive a dividend for that period.
Preferred shareholders should be able to exchange their paper for similar securities in these new entities, with warrants attached for conversion into common shares.
And that is certainly true of the preferred shareholders also.
Investors should keep in mind that the shares are not cumulative, meaning that in the event of a missed payment, the company does not have to pay the balance of missed dividends to preferred shareholders before resuming a common dividend.
He slams not just the decision to let Lehman Brothers fail in September 2008 but others, as well the imposition of losses on uninsured depositors at IndyMac, a big Californian thrift, in July of that year, and the hit to preferred shareholders in Freddie Mac and Fannie Mae when the government took over America's two housing-finance giants.
Apple could distribute high-yielding, tax efficient preferred stock to existing shareholders at no cost.
By issuing preferred stock to existing shareholders, Einhorn believes that Apple can unlock the value on its balance sheet while retaining its existing cash hoard.
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He has unsuccessfully been lobbying the company for months to issue perpetual preferred shares to its shareholders that would pay a nice yield and give hedge fund managers a new security to trade, which is the kind of thing they love.
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Mr Einhorn's proposals for releasing funds to shareholders involve "preferred" stock - which pays a fixed dividend over time.
Companies that previously preferred to reinvest their earnings now give shareholders cash.
Apple's board already has the right to issue preferred stock, but it is asking shareholders at its annual meeting later this month to vote on a proposal that would require shareholder approval to issue preferred stock.
Mr Einhorn first approached Apple about his idea for the issue of perpetual preferred stock and a higher dividend payout for shareholders at the end of May, Apple said.
Greenlight Capital's Einhorn urged Apple shareholders to reject a bid to eliminate preferred stock from the company charter.
Shareholders would get the 4% perpetual preferred and could keep it or sell it to investors interested in the cash flow.
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To avoid the risk that it might wriggle free through a split vote from its shareholders, they signalled support for their preferred winner.
To qualify for S corporation status, you must meet certain rules, such as having fewer than one hundred shareholders and issuing only one class of stock (preferred shares aren't allowed).
Shareholders did not however manage to secure a board seat for their preferred candidate.
Preferred stock compensates investors for diminished voting rights by giving them priority over common shareholders for dividends and typically by paying higher comparative yields.
Shareholders may nominally own such corporations but their share certificates are more like preferred stock than ordinary shares.
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Astra's big shareholders are aware of Mr Mogren's abrasive nature, but have preferred to judge him by results.
Einhorn wants Apple to issue "iPrefs, " preferred shares with a guaranteed dividend, as a way of committing the company to sharing its massive profits with shareholders.
And, to the extent taxpayers are going to put preferred stock into this entity, it will be structured so that the first losses will be borne by the existing shareholders.
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