Methods and systems for providing preferred income equity replacement securities
View Patent ↗In one aspect, the invention comprises a method comprising issuing perpetual preferred securities that provide non-cumulative dividends with a fixed liquidation preference; wherein valuation of the securities upon redemption or conversion is based on market value of a specified number of common shares, and wherein the securities are operable to receive treasury stock method accounting. In various embodiments: (1) the securities receive C or D Basket treatment from Moody's; (2) the securities receive treasury stock method accounting because, upon conversion or redemption, common shares are issued only with respect to the valuation of the securities in excess of the fixed liquidation preference; and (3) upon conversion or redemption the number of common shares is equal to (A×B−C)/B, where A=a conversion rate, B=price per share of the common shares, and C=the fixed liquidation preference.
1. A system comprising:
memory operable to store at least one program; and
at least one processor communicatively coupled to the memory, in which the at least one program, when executed by the at least one processor, causes the at least one processor to perform the following steps:
access and process data regarding terms and conditions of perpetual preferred securities that provide non-cumulative dividends with a fixed liquidation preference;
access and process a valuation of said perpetual preferred securities upon redemption for a specified number of common shares or conversion to the specified number of common shares, wherein said valuation is based on a market value of the specified number of common shares,
access and process data regarding treasury stock method accounting of said perpetual preferred securities; and
upon redemption for the specified number of common shares or conversion to the specified number of common shares, facilitate the issuance of the specified number of common shares;
wherein upon redemption for the specified number of common shares or conversion to the specified number of common shares, said specified number of common shares is equal to (A×B−C)/B, where A=a conversion rate, B=price per share of said specified number of common shares, and C =said fixed liquidation preference.
2. The system of claim 1 , wherein said perpetual preferred securities receive C or D Basket treatment from Moody's.
3. The system of claim 1 , wherein said perpetual preferred securities receive treasury stock method accounting because, upon redemption for the specified number of common shares or conversion to the specified number of common shares, the specified number of common shares are issued only with respect to said valuation of said perpetual preferred securities in excess of said fixed liquidation preference.
4. The system of claim 1 , wherein said perpetual preferred securities are not redeemable for the specified number of common shares or convertible to the specified number of common shares at an option of a holder of said perpetual preferred securities.
5. The system of claim 1 , wherein upon redemption for the specified number of common shares said liquidation preference is paid in cash.
6. The system of claim 1 , wherein said perpetual preferred securities are convertible at any time after a specified date into non-convertible preferred stock and the specified number of common shares.
7. The system of claim 1 , wherein said perpetual preferred securities provide holders with preferred stock voting rights and are treated as preferred stock according to GAAP accounting rules.
8. The system of claim 1 , wherein said perpetual preferred securities are redeemable for the specified number of common shares only upon notice of redemption by an issuer.
9. The system of claim 8 , wherein said notice of redemption is preceded by a stock price of the specified number of common shares achieving at least a specified value for at least a specified period of time.
10. The system of claim 1 , wherein said non-cumulative dividends are increased if a stock price of the specified number of common shares achieves at least a specified value for at least a specified period of time.
11. The system of claim 1 , wherein the conversion rate is increased if a stock price of the specified number of common shares achieves at least a specified value for at least a specified period of time.