Common Stock Warrants

By Dudley Pierce Baker Founder – Editor Common Stock Warrants The Federal Government is promising massive loans to large corporations due to the massive slowdown and halting of much business due to the covid-19. What will the government get in return for those loans, if anything? On Tuesday evening we had news, that yes, the government will be receiving stock warrants on many of the airline companies being a part of the loan/bailout program. We still ask, ‘what about Boeing”, ‘what about other industries’? From MarketWatch (April 14) “Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines, and Southwest Airlines have told us that they plan to participate in the Payroll Support Program,” Treasury Secretary Steven Mnuchin said in a statement on Tuesday afternoon. “Conversations continue with other airlines regarding their potential participation.” Barrons Article Out This Morning: Airlines Are Finally Getting a Government Bailout. Here’s Why Their Stocks Are Falling This appears to parallel the situation in the financial crisis in 2008-2009 where the government stepped in and bailed out the banks and auto industries. As I write this, I have not seen the details of the stock warrants for each airline company, i.e., the exercise price of the warrants and the expiration date. In the financial crisis, all of the large banks including J.P. Morgan Chase, Bank of America, Wells Fargo and many others received loans from the government. Also, General Motors and Ford were bailed out. In … Continue reading →