More Dilution for Citi and HBOS Shareholders
Submitted by
CalculatedRisk on Tue, 04/29/2008 - 7:07pm (90 comments)
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Insane. Yet it will be spun as a positive since the can actually raise money by diluting.
THEY can....damn firsty froth typos.
So, what is the Kelly Blue Book value on this stock now?
(First?)
Treasury eyes stronger powers for Fed
"The Federal Reserve could use proposed new regulatory powers to try to stop credit and asset market excesses from reaching the point where they threaten economic stability, the US Treasury said on Tuesday."
FT.com / UK - Treasury eyes stronger powers for Fed
Dancing Citi..
Rights offering is different. It is not dilution to those who don't wish to be diluted. Offering price is also in theory unrelated to the stock price. It is like a negative dividend. You can do it at 10% of the price (90% discount in your terminology) if you want and still it is no reflection of the intrinsic value. You do need to offer it at a discount though otherwise people can just buy from the secondary market. The steeper the discount the more valuable is the right and the more shareholders will feel compelled to exercise the right.
"The steeper the discount the more valuable is the right and the more shareholders will feel compelled to exercise the right."
Sounds like blackmail to me.
So HZ - what do they get? The right to give the bank money and it doesn't result in new shares? Please explain - I'm a very slow Yankee...
"The Federal Reserve could use proposed new regulatory powers to try to stop credit and asset market excesses from reaching the point where they threaten economic stability, the US Treasury said on Tuesday."
You mean like raising rates?
That's ridiculous. If you offered a rights issue at a 90% discount, it would be dilutive to shareholders who would or could not exercise the rights. A rights offering at 45% discount is a semi-coerced way to get new capital from existing shareholders. No?
Agency spreads are 1½ basis points to 3 basis points tighter. Dealers report that the buying barrage which began with the back up in rates has continued even as yields drop.
Are they getting the loot from slants or towel heads?
US watchdog presses for mortgage rescues...
The US should fight the housing crisis by using low-cost government loans to help borrowers pay down unaffordable mortgages, Sheila Bair, one of the countrys top banking regulators, proposes.
"Writing in the Financial Times on Wednesday, Ms Bair, chairman of the Federal Deposit Insurance Corporation, says the new government loans should cover up to 20 per cent of the value of the existing mortgages."
FT.com / US & Canada - US watchdog presses for mortgage rescues
FFDIC,
"The Federal Reserve could use proposed new regulatory powers to try to stop credit and asset market excesses from reaching the point where they threaten economic stability, the US Treasury said on Tuesday."
And they couldn't under current law?
Nonsense.
Cheers,
OT: California's Deficit May Swell to $20 Billion on Housing Slump
California's Deficit May Swell to $20 Billion on Housing Slump - Bloomberg.com
First it was $7B, then $11B, then $14B and now we're talking $20B.
Soon we'll be talking about real money....
"Slants" & "Towel Heads" are racist terms used by backward and ignorant hicks.
Please take your bigotry elsewhere.
ac,
Ah, I see you've addressed that FFDIC post.
Cheers,
"HBOS PLC announced a £4 billion, or roughly $8 billion,"
Ah yes, just double the pound to est. US Toilet Pap....$'s.
Sheeesh!
Cheers,
042108,
"Gary Crittenden, whom Prince hired from American Express to be chief financial officer and who is much respected around Citi, told Fortune in March that, out of caution, the company intentionally raised more capital than its balance sheet immediately required. This cushion came to look like a lifesaver as Citi issued its results for the first quarter of 2008."
Can anyone run Citigroup? (page 3.) - Apr. 21, 2008
Eight friggin' days ago!!!!!!!!! Why is Pandit not doing a perp walk????
You don't put this crap together in 8 friggin' days.
Cheers,
OT:
Cool stuff from the Ticker Forum protest that took place in NYC last Friday.
Consider watching the following coverage of a recent protest in NYC regarding the Fed bailout of Bear Stearns. The Ticker Forum put this together and is comprised of informed voters and investors.
YouTube - Financial Crisis Protest - New York, April 25, 2008
Its important to follow the links at the end of the presentation and tell your congress-people what you think.
I also attach a White Paper written by Karl Denninger, founder of the Ticker Forum, that was faxed to all members of Congress and a link a petition you should sign if you agree this madness must end.
White Paper: http://www.denninger.net/letters/mortgage-mess.pdf
Petition: Congress - Repair Our Financial System!
"'Slants' & 'Towel Heads' are racist terms used by backward and ignorant hicks."
"hick" is also an ignorant term. Pot, meet kettle.
Miz, Garuda...
Feed...Troll...Don't.
Arrange them is an order that makes sense.
Cheers,
I recall mp saying that Conjure had invested in C not long ago based on the Paulson put. Given the fact that this sale of stock is bound to cause the stock price to go up (as opposed to a stock buyback, which would also make the stock go up), Conjure may calm down and stop gnawing the bark off of so many trees.
Sorry my math's off as I'm pissed.
"Eight friggin' days ago!!!!!!!!"
OK it's 11.
Which has some comic implications of its own...
YouTube -
Cheers,
""'Slants' & 'Towel Heads' are racist terms used by backward and ignorant hicks."
"hick" is also an ignorant term. Pot, meet kettle."
Touche. While a superficially descriptive term isnt sensitive, it isnt exactly demeaning by itself either. Not like referring to someone as backwards or ignorant. Someone needs to look in the mirror.
Bush Says Pain From Economy Defies Easy Fix
Bush Says Pain From Economy Defies Easy Fix - NY Times
If there was a magic wand to wave, Id be waving it, of course, Mr. Bush said, referring specifically to gasoline prices, which have climbed $1.40 a gallon in 18 months. But there is no magic wand to wave right now. It took us a while to get to this fix.
Instead of embracing new proposals, Mr. Bush mainly dusted off old ones. He called on Congress to address the cost of energy by opening the Arctic National Wildlife Refuge to drilling for petroleum and expanding nuclear power, two plans that have long been on the legislative shelf.
Mr. Bush also said, Those who worry about recession, slowdown, whatever you want to call it ought to make his tax cuts permanent.
Mr. Bush was cool to proposals by Senator John McCain of Arizona, the presumptive Republican nominee, and Senator Hillary Rodham Clinton of New York, a Democratic presidential contender, to give drivers a break by temporarily suspending the 18.4-cent-a-gallon federal excise tax on gasoline.
The other Democratic contender, Senator Barack Obama of Illinois, on Tuesday dismissed the suspension of the gasoline tax as a gimmick.
Mr. Bush similarly rejected an idea by a fellow Texas Republican, Senator Kay Bailey Hutchison, to stop making deposits in the Strategic Petroleum Reserve.
If I thought it would affect the price of oil positively, he said, I would seriously consider it.
ac,
Ah, I see you've addressed that FFDIC post.
Cheers,
Misean
Giving the Fed more power is like saying Dick Cheney needs a bigger shotgun the next time he goes hunting.
Conjure Bag says, "Enjoy!"
http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0804/document/dd042808.pdf
If there was a magic wand to wave, Id be waving it, of course, Mr. Bush said, referring specifically to gasoline prices, which have climbed $1.40 a gallon in 18 months. But there is no magic wand to wave right now. It took us a while to get to this fix.
There was a fairly easy fix back in 1995 -- responsible monetary policy.
Alas, that wouldn't have made Alan Greenspan a rock star so it wasn't an option.
The down grades by S & P and continued write off of losses by Citi, leave me wondering what my poor beleagured Public Employees defined benefit pension fund will look like when marked to market at years end. Long sentence but I am too nervous to edit. Most public funds loaded up on the higher yield stuff over the past few years to build yields. Once again, the very large chickens are coming home to roost.
ac,
"If there was a magic wand to wave, Id be waving it, of course, Mr. Bush said, referring specifically to gasoline prices, which have climbed $1.40 a gallon in 18 months. But there is no magic wand to wave right now. It took us a while to get to this fix.
There was a fairly easy fix back in 1995 -- responsible monetary policy."
Well...If they hiked rates some 6000 bps tomorrow, that would help. But then I was calling for FFR hikes in July 07...that didn't happen.
Ain't gonna happen now.
Got food?
It's coming...fast.
Cheers,
Viewing,
"The down grades by S & P and continued write off of losses by Citi, leave me wondering what my poor beleagured Public Employees defined benefit pension fund will look like when marked to market at years end."
Why hasn't it already been marked to market? ERISA and other shite is heading straight for the fan now.
Cheers,
404 Error
Here is one reason for pollution, warmer water and dead fish:
Salt caverns are carved out of underground salt domes by a process called "solution mining." Essentially, the process involves drilling a well into a salt formation, then injecting massive amounts of fresh water. The water dissolves the salt. In creating the SPR caverns, the dissolved salt was removed as brine and either reinjected into disposal wells or more commonly, piped several miles offshore into the Gulf of Mexico. By carefully controlling the freshwater injection process, salt caverns of very precise dimensions can be created. For every barrel of crude oil to be stored in the SPR's salt caverns, it took 7 barrels of water to create the storage space.
DOE - Fossil Energy: The Strategic Petroleum Reserve Storage Sites
Our fund marks to market daily but only show total returns when they report at year end.
Viewing,
You sure? I looked CALPERS model for this and was not impressed.
Cheers,
That Citi as to do the rights offer not even 3 weeks ater the 8-K(nice of them to belatedly declare their Tier I ratio) shows how bad citi has screwed up.
They now have $15bn in wiggle room for writedowns for next Q before their cap ratios get dicey, expect another $10bn writedown & $3+bn loss.
At least in the 8-K they made an attempt in almost being sort of frank about the scope of the situation.
Hopefully the stock rightly gets hammered & presents a better buy in point.
Misean: I looked at the annual report and it states that the custodial bank reports market value as of fiscal year end, June 30. CALPERS is a big time operation compared to this one so they may report more often. Thanks
Here re just a few things you should be panic buying:
Naphthas are also used in other applications such as:
(as an unprocessed component - in contrast to reforming above) in the production of petrol/motor gasoline.
industrial solvents and cleaning fluids
an oil painting medium
the sole ingredient in the home cleaning fluid Energine, which has been discontinued.
an ingredient in shoe polish
an ingredient in some lighter fluids for wick type lighters such as Zippo lighters.
an adulterant to petrol
a fuel for portable stoves and lanterns, sold in North America as white gas or Coleman fuel.
historically, as a probable ingredient in Greek fire (together with grease, oil, sulfur, and naturally occurring saltpeter from the desert)
a fuel for fire spinning, fire juggling, or other fire performance equipment which creates a brighter and cleaner yet shorter burn.
to lightly wear the finish (polish) off guitars when preparing "relic" instruments.
to remove oil from the aperture blades of camera lenses, which if present can slow the movement of the blades, leading to overexposure.
in medieval times, pots containing naphtha were used in battle as a form of primitive grenade.
Naptha is used in the furniture industry on "works in progress" to artificially, and temporarily (until it evaporates) see what the patina will look like when the piece is oiled and/or aged. It is useful in matching adjacent boards for a join, primarily with tabletops, panels and shelves.
in the process of extracting pure Dextromethorphan from cough syrup
Re: Singapore (Platts)--28Apr2008
Prices of benzene and toluene on an FOB Korea basis rose $11-15/mt when
markets opened Monday, with strength in crude oil underlying gains.
Benzene prices rose by at least $11/mt on stronger US benzene values last
Friday, which closed 6 cents/gal ($17.96/mt) higher, with a May trade
reported at 390 cents/gal ($1,167.27/mt) on a delivered and duty paid
Houston/Texas City basis.
In Asia Monday, bids and offers for June-loading cargoes were placed at
$1,138/mt and $1,150/mt FOB Korea, respectively, compared with deals done
Friday evening in Asia at $1,127/mt.
US benzene prices strongly influence Asian prices, as the US Gulf is a
key import destination for South Korean cargoes.
Asian toluene prices also rose $10-15/mt Monday morning, with
market participants attributing the bullish sentiment to the fresh record
gasoline futures created on NYMEX Friday.
Alec,
"They now have $15bn in wiggle room for writedowns for next Q before their cap ratios get dicey, expect another $10bn writedown & $3+bn loss."
Not so sure with non borrowed reserves hitting $90B
Cheers,
Fast and Easy Loans
Countrywide Loss Focuses Attention on Underwriting - WSJ.com
Viewing,
Good to know. I've been looking at ERISA issues for a while...they cause nasty shocks to the Super Colander Tin Foil Hat.
Cheers,
Got food?
It's coming...fast.
Cheers,
Misean | 04.29.08 - 11:25 pm | #
Yes, I've been to PetSmart and stocked up on the food for senior dogs. ProPlan is good but it gives me gas. And that Alpo is downright nasty.
Writedowns, downgrades, etc. You know, things are setting up just like late December.
DannyHSDad writes:
OT: California's Deficit May Swell to $20 Billion on Housing Slump
You have to be careful about "running deficit" calculations. Near as I can tell California is $18.5b short through the end of FY '09 (Jun '09). Some will be buried in FT '08 despite the Constitutional balanced budget clause. Some will be called added debt which while legal is neither revenue nor spending reduction. I follow CRs excellent example in these matters. I can show $18.5b so that's what I use. Were I inclined to wild ass blog I could make a reasonable case that the State of California between now and Jun '09 is going to spend and/or obligate $30b more than revenues over that same period. The wild card is when the State wakes up to the fact that there is no possible tax scheme that can even on a one time basis cover the shortfall. That leaves them with choices as to which political powers they wish to face in court over "cuts" which are in most cases merely not increases. Balance the budget? Easy, pull out the FY '03 document and change the date. You know the very one that got Joe "Gray" Davis recalled for excessive spending.
As a once proud Hick (lost status now that i live in a city) i'd like to set the record straight. The other two terms were racist and offensive. But, hick? Anyone remember Larry Bird? Greatest white basketball player ever?
Bird was born in West Baden Springs, Indiana, the son of Georgia Kerns and Claude Joseph "Joe" Bird. He grew up in both West Baden and the adjacent town French Lick, which earned him the nickname "the Hick from French Lick" in his later basketball career
Call me a hick anytime you want. Call my buddy a towel head or my other buddy a slant and this hick will be the "hick that kicks" your ass.
As a once proud Hick (lost status now that i live in a city) i'd like to set the record straight.
Ya I thought 'hick' was the polite version of the not so polite things people call us (mostly) white rural people. And I don't even own a trailer - yet.
"If there was a magic wand to wave, Id be waving it, of course, Mr. Bush said,"
oh for the love of pete...don't nobody give that guy a magic wand...sheesh
Pelosi and others are right the SPR does effect price of crude and more importantly it creates storage space for futures contracts deliveries.
Strategic Petroleum Reserve - Wikipedia, the free encyclopedia
"On April 25, 2006, President Bush announced a temporary halt to petroleum deposits to the SPR as part of a four point program to alleviate high fuel prices.
On January 23, 2007, President George W. Bush suggested in his State of the Union speech that Congress should approve expansion of the current reserve capacity to twice its current level.[9]"
check out the price fluctuation between april 26, 06 when Pres. Bush suspended filing the SPR and there after the January 2007 resumption
2000s energy crisis - Wikipedia, the free encyclopedia
filling the spr is NOT inconsequential to the price of oil.
dryfly
I've lived in a trailer (with no plumbing other than a water barrel in the tree above) while we built a house. i wouldn't recommend investing in one. Stay where you are.
It might be falling both today and AH due to the dilution, but PUT option holders and short sellers will be painfully aware it is still @ $5 over its recent low of $20 ish
Just goes to show what a big component market psychology is of the price of an individual stock. They hated citibank before dilution when it was at $20, and now apparently they are 20% more in love when facing yet more dilution.
Automation and robotics are progressing quite nicely. More competition for human labor.
Watch a robot reassemble itself without human help
12th percentile,
Amen! Don't forget to call me for backup. I'm itching for some racial etiquette smackdown action. Bird was one sharp shooting son of a hick too.
Damn ppt getting me mad!
Ms. Bair is out of a job in 7 months. I wish it was sooner.
Misean,
I hear ya, but I'm expecting asset liquidation to balance out things. I just look at their capital raising v tier 1 ratios as a good rule of thumb in regards to Citi's financial situation and it's been a consistent one since Q3 07.
The question I I Citi is going to continue to get value on the assets they unload.
If HBO just stuck to cable programming, I doubt they would be in this mess.
In addition, from all I can figure, this is the two step.
1)Bank goes to the TAF/ABCD/MR.MYZTYLPLK window with illiquid assets.
2) Bank unloads equal amount of liquid assets in exchange
3) Bank raises capital to address losses while nominally maintaining liquidity.
If I'm mistaken, please advise. I don't have all the answers, but am willing to ask questions.
"If there was a magic wand to wave, Id be waving it, of course, Mr. Bush said,"
Why don't we re-jigger that Hope Now thing to cover the average American's gasoline? Or maybe some kind of Alliance? Maybe we can give gas stations some negative equity certificates for the price difference. Come on now, think harder!...(Not smarter)
"If there was a magic wand to wave, Id be waving it, of course, Mr. Bush said,"
Later, Mr. Bush asked his wife, Laura, what a magic wand is and if he could have a cookie.
"If there was a magic wand to wave, Id be waving it, of course, Mr. Bush said,"
"Unfortunately any real change takes work and might impact my friends or Dick Chaney's buddies, so tough luck there."
Damn-- George Bush, Ben Bernanke, Hank Paulson are staging a new version of "Waiting for Godot" they're calling it "Waiting for Harry Potter"
RE | 04.30.08 - 1:11 am | #
<begin geek>
That was incredibly nifty. I want one. Or several. Dozen.
</end geek>
Countrywide Financial Corp. said that 9.4% of the option ARMs in its bank portfolio were at least 90 days past due
9.4% 90 day delinquency on monthly payments that are on average about HALF what the actual monthly payment should be. They can't even keep up with paying HALF the normal payment. Very few of these have actually reset yet.
Sorry 12th percentile,
But, towel head isn't racist, anymore than diaper head is, any more than cowboy hat head, or baseball cap head is.
If they weren't born with a quality it can't be attributed to race.
[response to old comment]
"rich writes:
That's ridiculous. If you offered a rights issue at a 90% discount, it would be dilutive to shareholders who would or could not exercise the rights...."
That would be a problem - except that the rights issue is given to existing shareholders. ["Rights" or "warrants" are the same thing as call options, other than the source.] Yes, they have to pony up money to keep their original ownership stake, but the company also has the increase in the equity. That's the point - the company is tapping existing shareholders for cash.
Otherwise, I believe that they can sell the rights, allowing them to extract whatever option value is built into the rights price.
Later, Mr. Bush asked his wife, Laura, what a magic wand is and if he could have a cookie.
Elvis | 04.30.08 - 2:09 am | #
Edited to reflect Bush personality:
Later, Mr. Bush asked his wife, Laura, what a magic wand is and [demanded] a cookie.
Rights offering is different. It is not dilution to those who don't wish to be diluted.
I have an awesome startup company I'd like for you to stake.
Call it what you will, it's a mugging.
12th,
I started out as a hick, failed to value that status at its true worth and, provided RE finds some rational level over the next several years, aspire to return to that admirable condition.
Kitchen garden and orchard life looks pretty good as against the suburban Slough of Despond.
GM posts loss of $3.3B on weak US auto market, charges
Stock up $1
The North American turnaround is occurring," he said.(cfo)
is he reading from the builder's playbook?
The question of where the money is coming from is a very good one. Add all these offerings up and you are talking about a lot of money, all thrown in to plug holes and stop major leaks. Everybody can, or should, be able to see what happened to the last round of money dumped into these offerings, and they should also be able to see a dismal future and profitless years ahead.
Are the alternatives so much worse?
I'm curious to see how GDP grew by 0.6% in Q1...
The discount in a rights issue isn't particularly important.
The issuer offers shares at a nominal discount. You get the right to buy the same percentage of shares as you hold (so if you own 1%, you can buy 1% of the new shares at the discounted price). If you don't want to participate, you can sell your rights. It's a far more shareholder friendly way of raising capital than the way it is typically done in the US - over here, only the people that buy get the discounted shares (i.e. favored friends of bankers).
You are confusing a rights offering in a healthy growing company with one from a money-losing company struggling to shore up capital.
In the latter, a lot of investors just want to recoup as much money as they can. They certainly don't want to throw good money after bad.
In the latter, the steeper the discount, the greater the penalty for failing to pony up more capital.
The market for reselling rights may not be very liquid and there are negative tax consequences to selling (not exercising) rights.
I would not want to be a shareholder in this company with rights offered at a 45% discount.
The issuer offers shares at a nominal discount.
Forty-five percent?! Ah, this is obviously some strange usage of the word "nominal" that I wasn't previously aware of.
You get the right to buy the same percentage of shares as you hold (so if you own 1%, you can buy 1% of the new shares at the discounted price).
Which is lower than the market price at which your current holdings are, or rather were, priced. This is otherwise known as "doubling down on a losing bet", and generations of gamblers can explain exactly why it's usually a bad idea.
If you don't want to participate, you can sell your rights.
At a loss.
Remind me again why this method of raising capital is so shareholder-friendly?
Real gdp "grew" because the deflator applied to nominal gdp was 2.6% annualized. Is there a single person on the planet who actually believes prices went up only 2.6% annualized in Q1?
Also government spending, net exports and inventory accumulation made nice positive contributions. I've been calling for a long slowdown as opposed to a sharp recession, but I'm surprised Q1 did not show a contraction. Then again, as I posted above, if you understate inflation, that leads to an overstatement of gdp.
OK, relax people! The Big Brother said it's only an illusion that you're spending a lot more for almost everything. Actually the inflation is only 2.2%!
At this rate, we will avoid a recession altogether. Hah! Take that CR, and Roubini, and...
ok can someone please explain how this deflator thingie works?
Anyone who expects the government to report negative growth while Bush is in charge is kidding themselves.
It will be fun to see how all these companies tank while the numbers say we are "growing".
Citibank is raising the offering to $4.5b on "strong demand". I'm loading up!
The amount of book cooking going on is really getting out of hand. The fact that they are trumpeting this completely phony 2.6% annualized rate of inflation is disgraceful.
Meanwhile Pravda (the US media) reports these numbers unquestioned. There is now no question that they are simply making these numbers up. US 2008 is beginning to resemble the USSR circa 1988.
Futures up because GDP growth came in at +0.6 vs expected 0.5.
I would take the opposite side of that.
Good defined-risk entry point on the short side today. But I am always a little early or a little late on nearly everything.
Futures up because GDP growth came in at +0.6 vs expected 0.5.
I would take the opposite side of that.
Good defined-risk entry point on the short side today. But I am always a little early or a little late on nearly everything.
Well it's all up to the Fed really.
The could send the market up 500 points or down 500 points.
The GDP number is really just noise.
It looks like all the growth in the GDP number is from increased government spending.
Remind me again why this method of raising capital is so shareholder-friendly?
Mook | 04.30.08 - 8:45 am | #
Because in bankruptcy, shareholders get nothing . . . which is where they're headed without additional capital.
A kick in the balls is highly unpleasant, but it's downright delightful compared to castration.
Here, Conjure!
My experience lo these last 6 months or so is, on an even shorter scale, you fade the initial move after the Fed announcement.
The emerging meme is that a strong dollar is now good. Oceania has always been at war with Eurasia.
Mook-
"Remind me again why this method of raising capital is so shareholder-friendly?"
The alternative is that the company sells an equivalent-sized stake to another party at a discount. They get the discount and you are diluted. At least with a rights issue, the company isn't doing a sweetheart deal.
The talk about raising fresh capital and shares getting/not getting diluted thereby leads me to recount a family tale.
My grandmother described a stock purchase my grandfather made in 1914. He bought shares of a company that was going to run concessions at this huge fair in San Francisco in 1915. I think it was called the Panama Pacific. Anyway, after the shares were all sold, the concession company realized that they needed to raise more money and required the present share holders to pony it up (sort of like an assessment). My grandfather was given the alternative of providing another $1,000 bucks or forfeiting his shares without compensation. My grandmother talked him out of any further investment and they let the shares go. My grandmother wrote up this experience in a travel diary she kept at that time. She and my grandfather later had a wonderful time at the 1915 fair despite their failed investment.
So will Citi's stock price tank only if it cuts its dividend?
Re: rights offering
The responders to my comment probably only consider investment as paper. No, when you invest in a business through stock you own a piece of that business. And when it requires new equity funding you can come up with new equity funding or be diluted. Doing it through rights offering is much preferred to a secondary offering since most small investors do not have ready access to a secondary offering. (In the case of C it is moot since you can now buy at the same price from the public market if you don't wish to be diluted.) The issuer could also make the rights detachable so that you could sell the right if you don't wish to exercise it (I don't know if HBOS did this). If you don't consider stock dividend (of which stock split is a special case) dilutive then rights offering isn't dilutive if you exercise the right. Secondary offerings, private placements, convertible debts/preferreds are potentially dilutive because you may not have the same access as in a rights offering.
Look, loss was already incurred when the underlying business took the loss. Rights offering gives shareholders the choice to decide on how to take the loss: dilution or cough up with new capital. Choice is better than no choice.