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					                                                               Your Preferred Stock
                                                      A Guide for CHS Member Cooperatives


Why is CHS doing this? Doesn’t the company have money to pay out equity?

CHS is committed to adding value for all of its stakeholders, including its member-owners. Our member owners have been telling us for some time
that a timely return on their investment in this company is important to them. By issuing preferred stock, CHS retains permanent capital in the
company while at the same time redeeming member equity and providing a flexible financial tool for those who receive the preferred stock. CHS
has the financial ability to make continued equity redemptions, but must also balance the need to maintain an investment-grade financial condition
and invest in the company’s current and future businesses. The use of preferred stock for equity redemption helps us address member needs,
while at the same time meet our other financial objectives.

What are the tax implications of this preferred stock equity redemption?

Because the market value of the preferred stock will be equal to the stated value of the patronage certificates exchanged, there will be no gain or
loss to the member at the time of the redemption. If redemption value ($25 per share) was used and market value was greater than par, the
member would have an immediate taxable event.

What are the tax implications regarding the dividends received in the future by the holder of the preferred stock?

U.S. corporations, including cooperatives, may generally exclude 70 percent of dividends received from federal taxable income. This makes the
net yield to the holder greater than if this were an 8 percent corporate bond, whereby the full amount of interest payments is taxable for federal
purposes. Individuals would generally be taxed at the 15 percent rate applicable to dividends. Because the tax rules relating to dividend income
may be different depending on the specific situation of each taxpayer, please check with your tax advisor for the rules applicable to you.

Do the shares have a stated termination or maturity date?

No. The preferred stock shares will remain outstanding until the company decides to redeem them. The soonest the company could call the stock
for redemption is 2008.

Why was the 8 percent rate selected? Could the dividend rate be changed on a future offering?

The 8 percent rate was selected based upon the rates offered by companies of comparable credit quality who issued similar securities during the
same time period.

The 8 percent rate will remain in effective as long as the preferred stock is outstanding.

Will I get a stock certificate?

No. Although it’s not necessary, you may request one, but keep in mind that stock certificates are negotiable instruments and must be
safeguarded.
What if I/we want to keep the stock and the information on the statement is inaccurate?

To change this information, please contact Wells Fargo Shareowner Services, with whom CHS has contracted for some administrative support.
Their number is 866-280-0241.

If we elect to keep the stock and receive dividends, when will they be paid?

CHS preferred stock dividends are paid quarterly, based on the calendar year.

How do I reassign preferred stock?

Some cooperatives will chose to redistribute all or part of their preferred stock to members as redemption of local cooperative equity. Some
individuals may opt to reassign their stock to another person, such as a family member. To reassign stock, you must work through Wells Fargo,
the financial institution CHS has hired to handle these transactions. Contact Wells Fargo Shareowner Services. There are no fees for these
transactions.

How do I sell my preferred stock?

Preferred stock may be sold by working through any broker you chose, similar to any other stock you may own. Some brokers may charge a fee
for this.

Does this reduce the number of votes I have in CHS?

Technically, yes, but keep in mind that each time equity is redeemed, your number of votes is reduced and that this also reduces number of votes
held by other owners in system. It’s also important to remember that at the same time your votes are reduced through equity redemption, you
likely are earning additional equity through the business you did with CHS the previous year.

What do I do with my preferred stock once I receive it?

Local cooperatives or individuals have three choices. They may hold it and receive the 8 percent annual dividend. Or, they may sell it into the
public market through a broker or reassign it to another owner.

How do I know what the preferred stock is valued at on any given day?

Current information on the preferred stock, listed on the NASDAQ exchange under the symbol CHSCP (CHS cumulative preferred), is available
from a number of sources including NASDAQ’s web site and the CHS web site.

Can I sell it right away?

That decision is up to the individual or member cooperative.

How do we record our preferred stock in our books?
Preferred stock is a marketable security and should be classified as such and recorded on a “mark to market” basis. The preferred stock dividends
should be treated as regular income, not a stock retirement.

What if our auditor has questions?

Please call the CHS Preferred Stock information line at 800-232-3639 Ext. 2661.




            5500 Cenex Drive
Inver Grove Heights, MN 55077

Wells Fargo Shareowner Services:
866-280-0241
CHS Hotline:
800-232-3639 Ext. 2661

www.chsinc.com
www.nasdaq.com: chscp

				
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