Since 2012 RYAM and its CEO, Paul Boynton have been serial abusers of their capital providers, both debt and equity; but they have been good friends of investment bankers who have received millions in fees.

Share Price

Since Paul Boynton’s appointment as CEO in 2012 he has consistently destroyed value, first at Rayonier (RYN) and then at Rayonier Advanced Materials (RYAM), have consistently destroyed shareholder value since the company’s listing in June 2014 and are down by 82%, the black line below, since the company’s listing in 2014. By contrast, over the same period the Dow Jones Wilshire broad stock market indices, the blue line, rose by more than 100%.

Dividends 

RYAM and its predecessor, RYN, consistently paid dividends for more than 50 years. In 2012 RYN paid more than $200 million in dividends. By contrast, under Boynton after the disastrous expenditure of $400 million on the C-Line and the flawed acquisition of Tembec, in 2019 RYAM ceased to pay any dividends at all and it is unlikely that they will ever pay a dividend again, because of their level of indebtedness.

Convertible Preferred stock returns and dilution

https://investors.rayonieram.com/news-releases/news-release-details/rayonier-advanced-materials-announces-pricing-mandatory

Raised, approximately $150 million in 2016 on a 3 year security with an 8% coupon convertible in 3 years at a conversion rate of between 6.6 and 7.75 shares per $100. At the time for an investor in the convertible pricing it assumed a share price between 12.90 and $15.15. At the time of the issue, the RYAM share price was $21.40 so this looked like a reasonably safe investment with a high coupon.

The share price at the August 2019 conversion date the shares had dropped in value by 67%  from $21.40  to, roughly, $ 7 per share.

Consequently, the holders 7.7 shares at $7, a notional value of $54 per $100 invested; a loss on the capital invested of 46% over three years.

https://www.preferredstockchannel.com/symbol/ryam.pra/

The conversion of the shares at a low value didn’t just harm the holders of the preferred as the inevitable effect of the conversion was a dilution of the existing shareholders as well so both sets of investors lost on this transaction.