I think those hoping for something like an 8-10x exchange ratio for jr pref to common are likely to be disappointed. If we even get to the point of a deal / exchange, the Jr pref has less leverage than most assume given the govt's warrants and commoners interests are likely aligned plus the threat of not turning on the non-cumulative dividends for many years (I don't think a common dividend is necessary to sell shares). Moelis was more like 3x. If they would fairly retire the sr pref I guess the jr pref holders would take something near or slightly above Moelis.
12.5x is my top-end scenario based on the Citi conversion, where the conversion was offered at 3x the previous day's ratio. FNMAS just hit 4x FNMA today. I won't be disappointed if it doesn't happen, but since FNMAS is 4x FNMA right now, I don't expect a conversion offer at anything lower than that. Otherwise it will be declined or undersubscribed, defeating the purpose.
4.5x (4.5 common shares per $25 of par value) is my baseline scenario at the moment, though I'm probably going to adjust this upward with Phillips' talk of a conversion at market value. 4.5x would require the commons to reach $5.56 before the conversion is offered, and I think that's a stretch.
The first Moelis plan got this right, with its 3.5x conversion ratio somewhat above that in the market. The updated plan has conversion ratios of 1.7 and 2.1 which just won't get it done. The cases have to be settled, and a weak conversion offer like that doesn't do any good. Also remember that the Moelis plan was paid for by pref shareholders; I find it very suspicious that their plan would disproportionately benefit the commons.
The idea that the existing prefs' dividends could remain off for a long time is utter garbage, though. There's no way the cases get settled while this is possible, and I disagree that selling common shares will be easy with no short-term prospects of a common dividend. Why make the capital raise harder rather than just turning the pref dividends back on or offering them a generous conversion and saving money at the same time?