Published:
Newcastle Investment Corp. Preferred Stock Offer Deemed Coercive
Ramat Securities, Ltd. ("Ramat Securities"),
a registered broker-dealer and securities investment firm based in
Cleveland, Ohio, believes that the proposed preferred stock redemption
offer of Newcastle Investment Corp. (NYSE: NCT) (NYSE: NCT.PrB) (NYSE: NCT.PrC) (NYSE: NCT.PrD) at $6.76-7.19 per share for its Series B, C and D
preferred stock is grossly inadequate and potentially coercive.
Howard Amster, a principal of Ramat Securities, commented, "We believe the
proposal is an attempt to 'squeeze out' the preferred stockholders at
substantially less than the true value of their investment." Mr. Amster
further stated, "The proposal would benefit the holders of the common stock
at the expense of the preferred holders."
Mr. Amster said that he "Believes that the proposed purchase price is
grossly inadequate, representing only approximately 25% of the liquidating
preference plus accrued dividends on the preferred stock." He explained
that "A number of financial companies have recently restructured their
preferred stock with exchange offers that typically provide approximately
$21 of common stock value per $25 of liquidating preference preferred,
representing approximately 84% of such value."
If approved, Ramat Securities believes that the proposal would strip
non-tendering preferred shareholders of their preferential dividend and
voting rights and limit their liquidation rights, effectively subordinating
the preferred stock to the outstanding common stock and leave the preferred
holders with an illiquid investment due to the proposed de-registration of
the preferred stock.
As the holder of more than 7% of the Newcastle's preferred stock, Mr.
Amster indicated that he could not support such a coercive and unfair
proposal, and believes that Newcastle should restructure the offer in the
interest of all shareholders.
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Copyright © 2009, NewsBlaze,
Daily NewsTags: ,FinancialServices:InvestmentServices and Trading, ,NYSE0001,NYSE0001,OH,CLEVELAND, OH
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