That would lower the participating shareholders' monthly maintenance fees and would reduce the balance of the underlying mortgage and thus make the building more attractive.
Another benefit to joining an appraisal case, lawyers say, is that Delaware law gives participating shareholders 60 days after a shareholder vote to change their minds and tender their shares.
In the case of dormant entities like the Heriot fund, the Cayman court said that liquidation was justified because "it has become impractical, if not actually impossible, to carry on its investment business in accordance with the reasonable expectations of its participating shareholders, based upon the representations contained in its offering document".
Or, for those double-dipping participating shareholders, what if the company sold for less than $32 million?
So participating preferred shareholders in Acme Inc. would get a total of $32 million back, leaving just $48 million for common shareholders.
This is why participating preferred shareholders are sometimes accused of double dipping, precisely because they take two slices of the capital pie.
In short, participating preferred shareholders are entitled to receive their initial investment, plus a pro rata share of the remaining capital in a liquidation event.
Those participating preferred shareholders not only recoup their $20 million, but they'd also be entitled to 20percentt of the leftover proceeds of the sale, an additional $12 million in this case [20% * ($80 million from the acquisition – $20 million already returned to participating preferred shareholders)].
It's important to note that there are a few clauses that can serve to limit the financial impact of participating preferred shareholders, such as capping the amount of money they can take from the remaining proceeds.
Under the share swap proposed in April, investors who now control the company with a financial stake of just 14.7% would own 31% of Oi (assuming that all shareholders participate); other voting shareholders would see their stake rise from 13.8% to 23.7%.
Hong Kong's Securities and Futures Commission has accused Li of rigging a shareholder meeting by handing out shares to new investors so that they can participate in the shareholder vote on the buyout.
