Methods and systems for providing preferred income equity replacement securities

Abstract

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.

We claim: 
     
         1 . A method comprising:
 issuing perpetual preferred securities that provide non-cumulative dividends with a fixed liquidation preference;   wherein valuation of said securities upon redemption or conversion is based on market value of a specified number of common shares, and   wherein said securities are operable to receive treasury stock method accounting.   
     
     
         2 . The method of  claim 1 , wherein said securities receive C or D Basket treatment from Moody's. 
     
     
         3 . The method of  claim 1 , wherein said securities receive treasury stock method accounting because, upon conversion or redemption, common shares are issued only with respect to said valuation of said securities in excess of said fixed liquidation preference. 
     
     
         4 . The method of  claim 1 , wherein said securities are not redeemable or convertible at holder's option. 
     
     
         5 . The method of  claim 1 , wherein upon conversion or redemption said number of common shares is equal to (A×B−C)/B, where A=a conversion rate, B=price per share of said common shares, and C=said fixed liquidation preference. 
     
     
         6 . The method of  claim 1 , wherein upon redemption said liquidation preference is paid in cash. 
     
     
         7 . The method of  claim 1 , wherein said securities are convertible at any time after a specified date into non-convertible preferred stock and common shares. 
     
     
         8 . The method of  claim 1 , wherein said securities provide holders with preferred stock voting rights and are treated as preferred stock according to GAAP accounting rules. 
     
     
         9 . The method of  claim 1 , wherein said securities may be redeemed only upon notice of redemption by an issuer. 
     
     
         10 . The method of  claim 9 , wherein said notice of redemption is preceded by a stock price of common shares achieving at least a specified value for at least a specified period of time. 
     
     
         11 . The method of  claim 1 , wherein said dividends are increased if a stock price of common shares achieves at least a specified value for at least a specified period of time. 
     
     
         12 . The method of  claim 1 , wherein a conversion rate is increased if a stock price of common shares achieves at least a specified value for at least a specified period of time. 
     
     
         13 . A financial instrument comprising one or more perpetual preferred securities operable to provide non-cumulative dividends with a fixed liquidation preference;
 wherein valuation of said securities upon redemption or conversion is based on market value of a specified number of common shares, and   wherein said securities are operable to receive treasury stock method accounting.   
     
     
         14 . The financial instrument of  claim 13 , wherein said securities receive C or D Basket treatment from Moody's. 
     
     
         15 . The financial instrument of  claim 13 , wherein said securities receive treasury stock method accounting because, upon conversion or redemption, common shares are issued only with respect to said valuation of said securities in excess of said fixed liquidation preference. 
     
     
         16 . The financial instrument of  claim 13 , wherein said securities are not redeemable or convertible at holder's option. 
     
     
         17 . The financial instrument of  claim 13 , wherein upon conversion or redemption said number of common shares is equal to (A×B−C)/B, where A=a conversion rate, B=a stock price of said common shares, and C=said fixed liquidation preference. 
     
     
         18 . A method comprising:
 purchasing one or more perpetual preferred securities that provide non-cumulative dividends with a fixed liquidation preference;   wherein valuation of said securities upon redemption or conversion is based on market value of a specified number of common shares, and   wherein said securities are operable to receive treasury stock method accounting.   
     
     
         19 . The method of  claim 18 , wherein said securities receive C or D Basket treatment from Moody's. 
     
     
         20 . The method of  claim 18 , wherein said securities receive treasury stock method accounting because, upon conversion or redemption, common shares are issued only with respect to said valuation of said securities in excess of said fixed liquidation preference.