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The majority bondholders who hold 78% of all bonds has accepted this change while
the minority 22% bondholders indicate that they are not willing to participate in this
rescheduling. The majority bondholders who are institutional investors agreed this
because they believe it is a better way for them to avoid the possibilities such as
declaring bankruptcy and not receiving any payments.
In order to encourage the minority bondholders to give up their old bonds, the
government is planning to delete the tax gross-up clause in the old bonds so as to
make the old bonds become less attractive. The majority has agreed with this advice.
Boeing should be civilly liable in federal law for failure to comply with NYSE Listing
Agreement and NYSE Company Manual. Private parties have rights to bring suit for
violations of the Securities and Exchange Act 1934 and SEC rules and regualtions
this includes violations of stock exchange and dealers rules to protect investors.
The appeal court did not agree with trial court that held breach of exchange rule could
never give raise to a claim under federal acts. This is inconsistent with recent
statements of the court and developing caselaw.
Two deficiencies of the Boeing notice. First, debenture holders were not told on any
materials that they could receive mail notice if they registered there debentures.
Second, the newspaper notice was inadequate. Although complied with requirements
of Indenture, it was simply insufficient to give fair and reasonable notice to the
debenture holders. This notice requirement arises from the contract between Boeing
and the debenture holders. In particular, there should be a necessity to protect
unsophisticated investors. Boeing could have easily advertised in the press or
provided details with proxy material.
The purchaser of a convertible debenture receives the debt obligation and the
expectation that the stock price will increase sufficiently that the conversion right
shall be worth more than the debt. The debenture holder relies on the opportunity to
make a proper conversion on due notice.
The debenture holders expectation is to receive reasonable notice and it is the holders
reliance on this that the courts will protect.