Mr Cooper Group Inc (COOP)

[CBA09]

Ref: Quote:
James Carreon testified before THJMW

when he worked for A&M, stating that the NOLs would dissipate with the return of the Capital Gains.

Commentary:

Yes, NOL's would dissipate, namely be offset, with the return of an equal amount of Capital Gains. If so, a good thing. As Income would be realized, (before offset of NOL's) to an amount equal or exceeding the $ 6 Billion NOL's.

NOL's are a value asset. Unused NOL, (amounts available after 2 yr carry back), can be carried forward 20 yrs.

Features:

1) Offset against any type of "Taxable Business Income", (capital gains, etc.,)

2) Extinguished If:
a) 20 year limit exceeded,
b) => 50 % merger, namely ownership change, can cause loss.

To avoid loss of NOL's a merger would be conducted without equity offering that would cause a ownership change. This would be by using preferred stock that has both:

1) NO voting rights,
2) NO conversion to common stock.

Conclusion:
NOL's are an attractive asset and a boost to cash flow. Each $ offset of Taxable Income protects the outflow of cash to the IRS.