They have allowed holders of the preferred shares, that have not even been converted yet. To vote at this meeting. They made them voters without giving them the equity shares as part of the conversion process that is required per M&A.
KKR can exercise the warrants soon. We shoild keep the exercise price on the new KKR/CITI preferreds at the ceiling if this thing stay abov They e $2.25 PPS.
The BOD giving the preferreds voting rights basically left out equity. With Hedge Funds KKR can pretty much do what it wants. This is what BKshadow was worried about.
Now the coattails are here for anyone to ride. Hopefully they will take us to riches.
I expect a "rinse and repeat" scenario for M&A in the future, that's why they need Delaware. The last thing they want to do is reverse split this stock. So, moving to Delaware and increasing the ability to issue equity shares for preferred shares is the only way to grow this shell to use up such a large arsenal of NOL's.
Think about it for a minute. To buy a large revenue producing co (1 Billion plus annually) requires lots of cash. The cash comes from preferred share sales. If you require the preferred shares to be converted when acquisition closes, you need a large equity structure. If the equity structure is backed by "tax-free revenues" you essentially will gain in value in pps over time with deciphering of share structure vs annual revs (investing 101).
Now as you increase in value and size and you want to do the same "special acquisition purpose vehicle" (SPAV) style acquisition of a much larger rev-producing co. You essentially need plenty of cash plus shares. If your PPS value vs O/S is coinciding with targets, a share swap plus cash to pay off debt including the company's preferred debt will be needed. If the holders elect for stock instead of payoff that is also a plus.
I expect this shell will grow fast and send some of those profits to their shareholders pretty fast. It's the payoff for complacency. Remember before the preferreds were allowed to vote 85% of this company was owned by the common equity man.
Keep this is in mind. The common man still owns the company, but your BOD just gave voting control to preferred holders because they really want us in Del and did not want the commons holding up their plans. Stay tuned to see if this move is good or bad for coattail-riding common holders. If history holds, it will be lucrative
for the common equity holders in the form of dividends in return for the complacency they had shown to this board over the last 3 years.
CORP 101. When given the ability by governing rules, never use your own money always use OPM (Other People's Money) Delaware affords WMIH this opportunity in a much larger scale and avenue to exponential growth, but locking the common man out by restricting his vote should be looked upon by all with sceptism. It is this move alone that gives me as a common-investor a red flag warning. Don't get me wrong, I still believe we will see a large-scale return on this investment and I will relish in the fact that I have the opportunity to ride a 100 Billion-Dollar private equity funds coattails. I will be taking some profits along the way and diversifying the risks to protect this large investment. I do believe this Board will do what they want and make it look like they care about our vote, but I do expect they will just issue more voting preferreds in the future that will guarantee the yes votes they need for whatever plans they have in their "Big Corp Heads!" KKR is a master at LBO.
Cheers
Have a Nice Day
Thanks for flying on WMIH Air. Just sit back in your seat, enjoy the food, drink, entertainment and let the BOD do the flying. While the cockpit rotates pilots in flight. It is most likely there is an auto-pilot on this plane.
GO DUCKS !!!!
