Us Airways/lcc Stock Question

[ondeadlin]

Can anyone tell me definitively if US Air stock will be dissolved or converted into the new LCC stock? Because I've seen reports both ways, including one report that shareholders will get .41 shares of the new airline for every US Air share.

Which, if true, doesn't seem like a bad deal.

America West is trading around $8 a share, and just gave their CEO a ton of options with a purchase price around that figure (indicating they certainly don't expect the new stock to go much lower).

With US Air stock selling around 50 cents a share, you could basically get a little less than 1 share in the new airline for every two shares of US Air stock. If the new stock sells for anything more than $1, you're ahead.

Obviously the long-term prognosis is a different question, but short-term, it seems like something's out of whack. What am I missing? (And, given my math skills and lack of knowledge about stock trading, I figure I AM missing something)

Any help?

 

[BoeingBoy]

Current US stock will be worthless. The exchange ratio you mentioned is for current AWA stock.

Jim

 

[FWAAA]

Shareholders of USAir will get nothing. The stock will be canceled upon confirmation of the plan of reorganization.

The only shareholders to get anything are the shareholders of the NON-bankrupt airline in the deal, American West. THEY will get stock in the new company. So will creditors of USAir.

But stockholders of USAir will get nothing. If they were gonna get stock in the new company, dontcha think it would be trading for more than 50 cents?

 

[ondeadlin]

Well, as I said above, I figured I wasn't getting something

So, tell me this, if the US Air stock is going to be cancelled, why's it even selling for 50 cents a share?

Why wouldn't someone just short it?

(I appreciate your patience for what are probably dumb questions, I'm admittedly not a stock trader)

 

[BoeingBoy]

So, tell me this, if the US Air stock is going to be cancelled, why's it even selling for 50 cents a share?

[post="288679"][/post]​

The stock hasn't been cancelled yet, so it's still out there. Presumably, someone paying 50 cents is hoping for news that pushes it to 52 cents (or some figure over 50 cents) to make a quick profit. The person selling it has either made a profit (unlikely at 50 cents) or is cutting their losses.

Why wouldn't someone just short it?

[post="288679"][/post]​

Since it trades only on the "pink sheets", I'm not sure that you could short it. Even if you could, you'd need someone to take the other side of that deal - folks like that are probably pretty hard to find....

Jim