A question on preferreds....

[Art G]

If a company has many issues of a preferred stock in the market, then goes belly up, how are preferred shareholders paid, if anything?
Do they go in alphabetical order, paying off series A before Series B? Or does every Series get a percentage? I can't seem to find a definitive answer. Thanks.

 

[boutros]

they are ahead of the common and behind the bondholders. I don't think that the series of really matters unless specific provisions are detailed in the offering.

 

[terminator]

You can look in the prospectus to find out definitively, but every preferred series I have looked at or bought was pari passu with the other preferred series. Skipping the prospectus, you can also look at the summary description on quantumonline.com -- they've been accurate on the things I have looked at.

Definitely not alphabetical -- on a side note I just "love" when the company assigns tickers that are different than the series letter.

 

[Art G]

Thanks terminator. This is what I've thought, but someone told me otherwise. Trying to figure out if there's a play somewhere within FNM preferreds? Some show 80% dividend, and some 18%? Not sure if one is better than the other?
The alphabetical would only designate which was offered first, I didn't know if that made it a senior note?

 

[terminator]

I'm pretty sure the dividends were suspended on the FNM preferreds.

And yes, generally the ones I have looked at are issued in alpha order but typically the only sense in which "A" is senior to "B" is that the potential call date for "A" is earlier since the issue date was earlier.

That said I've never had a reason to look at some of the companies like FNM or GM or C which have an alphabet soup of preferreds, debt and convertibles so I don't know how "orderly" their scheme is and whether they ever prioritize preferreds.