DF - Anyone in for the divi?

[GDFLS]

I am too late right now to get into DF for the $15 divi, but I do have a couple of questions.

Here is a snipit of a news story regarding the divi
By William Spain
NEW YORK (Dow Jones) -- Dean Foods said Friday that it will pay out a special one-time cash dividend of $15 per share in a move that would give back an estimated $2 billion to its stockholders.

Before the start of trading Dallas-based Dean (DF) said it plans to finance the dividend through a recapitalization of its balance sheet involving $4.8 billion in new senior secured credit facilities.

The dividend is payable April 2 to shareholders of record on March 27. As of Feb. 23, Dean Foods had 128.95 million shares outstanding, which would result in a total dividend of $1.93 billion. However, the total size of the payout will depend on the company's shares outstanding as of March 27.


DF already had a lot of debt, and yet it looks like to pay the Divi they are going to take on more debt or are they just moving around the debt they already have. Either of which, what is the advantage to DF for doing this? This maybe a novice question, but you guys have been easy with me before, so I figured I would ask.

Also, anyone else feel that it is worth getting into AFTER the divi payment?

[Thierry Martin]

889

[noobtrader]

GMR General Maritime did the same thing. Basically they have a lot of cash that they can hand out.. there is a simple catch to it though. Whatever the special dividend is, the stock will drop by that much on the X div date. Take a look at GMR. the stock traded at 44 bucs or so a share.. the 26th was its X date and it went down to 28 or so... the reason I know this is because I called GMR Financial Chief officer and asked him about the special dividend. basically.. your not gonna get the gains and the dividend. youll either get the dividend or the gains...

so if the stock goes up yes you will get the gains.. when the div is paid youll lose your gains and take the div see what i mean? I was head over heals with GMR then i found that out and i was pissed off that thats how it works.

[blackhawkzone]

so if the stock goes up yes you will get the gains.. when the div is paid youll lose your gains and take the div see what i mean? I was head over heals with GMR then i found that out and i was pissed off that thats how it works.

to use common sense, why is somebody going to pay you for the stock at the higher price without getting the dividend?

[GDFLS]

OK, my question is if they have the cash to pay $15 dividend why don't they use that money to pay down debt? What is the advantage.

What I was thinking of doing was putting on half a position before the divi and then after the stock price fell by $15 after they pay it I was going to enter the second half of the position.

This would have worked out well with the last SKS $4 special dividend. Anyhow I was late for this anyhow, so I will just see what happends and figure out the "what ifs" of the situation.

[blackhawkzone]

unless you plan on holding this in an ira, i wouldnt buy this until after the dividend. What is the point of buying something just to get stuck with a tax hit right off the bat. Granted, some of that dividend may be return of capital, but the rest will be taxable to you.