Calculator - Value of our investment under Two Share Plan

Good question, thebigshort , let’s pretend that our investor holding now 100,000 Class A Shares, i.e. $100,000 is on the current redemption list of 80 M Class A shares.

If the Two share plan would be approved, this redemption list would generate a total redemption request of 44 M New Class A shares (80 M * 55%).

Assuming that the max redemption per month is $1 M as communicated by HE and that NAV will stay at $.90, our investor would receive $1,250 / month from redeeming the part of the investment held in the New Class A shares.

With Class B shares the investors cannot make redemption requests. HE will redeem these shares when each property from HRAC portfolio is sold based on the actual proceeds.

An example is the Covehead, P.E.I. property. Based on NAV = $521,115, our investor’s share in this property would be $242.
As the property was sold for only $189,534, the actual amount that the investor would receive from HE is $88, i.e. only 36% from the book value.

Please, note that in Two Share Plan:

• The current deficit of 10% is eliminated from the HE balance sheet by passing it to the shareholders that will have their investment reduced with 10%
• The deficit is also passed to performing assets (mortgages) although it was created only by accounting write downs of non-performing assets held for sale in HRAC
• Based on the recent Covehead example, the investors are in for big losses that will occur as HRAC properties are sold, despite HE already spending years for asset remediation
  
  

As requested, here is a Redemption calculator for Two Share Plan. Have fun!