At your company’s recent board meeting, several directors argued persuasively for issuing preferred stock to raise needed capital. One of the reasons they probably gave was…
that since the company was already highly leveraged, preferred stock would bring in needed equity capital without diluting EPS.
that up to 70% of the capital raised from issuing preferred stock would be shielded from taxes.
that preferred stock would allow the company to switch controlling rights from common shareholders to the early investors and founders who would own the preferred shares.