A Preference for Preferred: A case study of Ratos' preferred stock issue

Sammanfattning: Our thesis chronicles the events leading up to Ratos' issuance of preferred stock in June 2013, and analyzes the market environment under which the issue took place. The study aims to identify factors that influence the choice to issue preferred stock in a Swedish context. Through a single case study, we investigate the direct and indirect factors that contributed to Ratos' financing decision. We find that the decision process faced a number of constraints, such as a no-debt policy, a low market value of equity, and a wish to keep dividend payments to common shareholders. Moreover, the opportunity to dictate the issuance terms to reflect the properties of the desired security and accommodate market trends, played an important role when Ratos decided on preferred stock. Our findings do not confirm nor refute existing theories on preferred stock issuance or capital structure. However, the study shed light on how financing decisions arise in the cross-section between financial and non-financial considerations, and might provide guidance for future research on preferred stock issues in listed corporations.