Merkado Barkada
December 17, 2024 | 8:10am
Cirtek [TECH 1.28, down 4.5%; 174% avgVol] [link] notified the exchange that its Preferred B-2 Subseries C [TCB2C 45.00, down 7.2%; 0% avgVol] shares would have the applicable dividend rate increased from 6.5864% to 14.1425% in accordance with the formula provided in the prospectus. According to TECH, “the new rate will take effect on the first Quarterly Dividend Payment for the year 2025.” TECH framed this as a decision of the board of directors, but it’s actually a contractual obligation under the terms of the preferred shares for the dividend rate to increase in the event the company fails to redeem the shares during the provided windows for redemption.
MB bottom-line: This alone isn’t a huge deal, but I don’t know many companies who would “choose” to allow their preferred shares issuances to breach the step-up deadline just for fun. That said, this is not something that I would like to see from a company in my portfolio. It’s not a tell-tale sign of trouble, but it’s the kind of inefficiency that I don’t like to be involved with, and TECH isn’t really known for their sober self-analysis or for being all that transparent. They’re quick to hype random positive developments of any size, but when something like this happens, it’s radio silence. That’s enough for me to put this stock on the naughty list. I mean, it was already there, but still.
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