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Under the usual nationalization, the common shares will be worth nothing as the entire company will be under public ownership. However, under this scheme, the
by furiouslol 18y ago
Under the usual nationalization, the common shares will be worth nothing as the entire company will be under public ownership.
However, under this scheme, the common shares, while diluted, are not explicitly worthless as the common shareholders still own a part of the company. As to how the shares will trade today, that would depend on whether the market had already anticipated this move and priced it in.
- bilbo0s 18y agoRight. And does this strike you as a bail out of the shareholders derived from an entirely understandable desire to avert the consequences that would attend their financial losses? Or, does it strike you as socialist capitalism. That is to say, the socialization of risk . . . and the privatization of reward?
- furiouslol 18y agoYou have to understand - the preferred shares of both companies are held widely by regional banks in the States as part of the min capital requirements. If the shares are totally wiped out, it will trigger widespread failures of these banks.