W2007 Grace Acquisition I, Inc. (fka WGCBP)

[trepanne]

EI doesn't it make sense the reason those dividends weren't included in the MOU is because that would mean that the lawyers for the Plaintiffs would have been paid a much higher fee?... had that happened it would have actually hurt the shareholders.

You aren't thinking about this from the POV of the people who actually negotiated the settlement - the attorneys and Goldman Sachs.

Goldman only cares about the total dollar amount, and that they achieve final closure. They're indifferent to paying the shareholders and having the shareholders pay the attorneys out of that, or paying the attorneys directly and reducing the amount paid to shareholders.

The attorneys strongly prefer getting paid by Goldman rather than the shareholders. For one thing, it gets them paid faster, cheaper, and with less risk. For another, it allows them not to disclose how much they got paid.

You're upset now, but you'd be just as upset if you received those accrued dividends followed by a substantial bill from the attorneys for their services. Now you'd be mad at your lawyers too instead of just being mad at Goldman Sachs, there's a chance you'd refuse to pay their bill, even if you did pay they'd have to wait, and the tax characteristics of extra cap gains plus 2% floor portfolio deductions (for the lawyers' fees) would actually be worse for you economically than receiving the lower amount in the first place.

But they fully intend to pay them down the road. This is a liquidation.

"Down the road" as in "after you have surrendered your shares in exchange for $26 and are no longer entitled to receive any further distributions".

It's a somewhat bitter pill to swallow, I know... especially for those who paid par prior to the buyout.

Getting hung out to dry in a buyout is an occupational hazard for holders of REIT preferred stock, but this is the worst example of which I'm aware. Usually the sponsors just hang onto the capital, suspend the dividends, and quit issuing financial reports. Goldman went one further and actually made a concerted attempt to steal the money here. The directors of W2007 Grace Acquisition I should be tarred, feathered, and run out of town on a rail. Instead their malfeasance will go completely unpunished.

[Enterprising Investor]

The truth will set us free in a few days.

Dear EI,

Thank you for your inquiry regarding W2007 Grace and the Press Release announcing the Memorandum of Understanding. We have received similar inquiries from other shareholders. Therefore, in a few days we will post on our website a “Frequently Asked Questions” document that will respond to these and other questions posed by preferred shareholders of W2007 Grace. If at that time you have further questions, please contact us again.

Best,
Catherine and Kimberly

I truly hope no one here really wants to see me get this thing wrong.

[Enterprising Investor]

W2007 Grace Acquisition I, Inc. Preferred Shareholder Litigation

http://www.chimicles.com/w2007-grace-acquisition-i-inc-preferred-shareholder-litigation

You can subscribe to receive case updates.

[mrholty]

Thanks Trepanne-

I'll take a look. I like to try and find interesting things. That's half the fun even if they never pay off.

You're right - You can never make them a large play so even if it does pay off it really doesn't mean much but there is some satisfaction there.

[Paullee]

Get over it. Read the document, there will be no dividends, you get 26, end of story.

[56Chevy]

EI doesn't it make sense the reason those dividends weren't included in the MOU is because that would mean that the lawyers for the Plaintiffs would have been paid a much higher fee?... had that happened it would have actually hurt the shareholders.

It's probably a good thing the dividends weren't included in this MOU.

But they fully intend to pay them down the road. This is a liquidation.

Correct?

[56Chevy]

$24.95 up 4.45 (21.71%)
Volume: 2,850

[mrholty]

You got any other nuggets that you are looking at today similar to back then?

[trepanne]

That's me - cybersquatting on this user ID internet-wide since 1997. Haven't been terribly active on message boards for the past several years.

As you can see my taste in securities investments hasn't improved, as evidenced by this nasty beast.

I'm well familiar with Goldman's heinous tactics in this particular issue... my first lot from Dec 2009 has a cost basis of $0.30/sh (!) - just 100sh so they would mail me the FS, which were among the freakiest I've ever reviewed. I would dearly love to be a fly on the wall at the meeting of the board where they said, "Hey I've got a swell idea for enhancing shareholder value - how about we give away 99% of our assets to an affiliate in exchange for... hey how 'bout those Mets?!"

And then of course the strongarm share repurchases to which you refer... which means they'll be paying themselves the $26/sh for much of the outstanding... which means that a good chunk of the settlement amount will be shifting from their left pocket to their right, since GS is sitting on both sides of the table. Not to mention the value of acquiring a nice control position in the fulcrum security here to block unfavorable outcomes.

You have to admire Goldman's tactical skill, but it is a dishonorable way to treat one's investors. Not to mention blatantly illegal, but they're going to get away with it, I'm sure.

I wouldn't worry too much about your sale getting reversed - FINRA and DTC are going to completely ignore the record date declared by the company; what's actually going to matter is the effective date of the merger reorg action, if and when it comes off.

[mrholty]

Yeah. It sucks. I think this is their full and final offer.

Its even worse than that. By their behavior they got shareholders to sell to them at a discount due to their behavior.
Unless the SEC steps in (and I don't see that they will as they are all lobbying for jobs at GS).

MF'ers.

Trep- You used to post on the Berk board on the fool.com? Do you post anywhere else now? I enjoyed reading you over there.

Its also interesting to whom is buying today. The letter stated that you had be a shareholder as of the 22nd. I assume they will get paid but its risky. I wonder if my sale on the 21st is still good as it should settle today.

[trepanne]

Rest assured that Goldman won't be paying accrued interest on these pfd. They're not going to pay a dime until they get a complete waiver of any further liability - that MOU represents the entire offer.

Now that their fund has gotten the cash from the exit, essentially what Goldman is doing is settling for a dollar amount about equal to the par value plus accrued dividends... except that $6M is getting diverted to a reparations fund, and another $60Mish is going to pay the plaintiffs' attorneys (assuming standard contingency fees of 40% apply). The $1/sh above the par value is all that's left.

It is hard to get too mad at the attorneys here, because (unusually for a securities class action lawsuit) they are actually benefitting their clients, and have done a pretty good job. If they fight it out to the bitter end, shareholder recoveries are unlikely to be better (the standard is pretty high for punitive damages) and it'll just delay the payout and rack up extra charges for the law firm.

Goldman's posture here is "Heads we keep all your money - tails we pay it back, and you can pay your collection costs out of your share".

Nice, huh?

[Enterprising Investor]

Can't you imagine the GS legal team taking the position of "what injury?"

"The preferred dividends could be deferred at any time. This happens every day. Our client intends to pay once the asset sale is completed."

"The assets are being sold to a third party. The preferred shares will be redeemed."

"As a result of the Great Recession, assets around the world were devalued. Management did a great job of keeping the firm from failing." I might call a comment like this the "consider yourself lucky" defense.

Telos is a situation I have been following for close to twenty years. Holder of TLSRP, a 12% Cumulative Exchangeable Redeemable Preferred Stock, have been waiting for a dividend since 1991. One might actually view the business as being insolvent today. The preferred holders are owed $118 million. The company only has $72 million in assets. The courts have not provided much relief. see Costa Brava Partnership III, L.P., et al. v. Telos Corporation, et al. and Hamot et al. v. Telos Corporation.

[Olddogcfo]

The guys at Goldman are some of the smartest and craftiest around. Also need to take into account the willingness of plaintiff attorneys to be paid to go away (they are not genuinely concerned about those they represent, only about getting paid). No mention in the MOU about accrued dividends (seems that if they were going to be paid it would be stated). The MOU references proposed amendments to the preferred charter(I'm guessing the elimination of accrued dividends). These four elements strongly suggest to me that there will be no payout of accrued dividends.

[bacc]

Second Trade, 400 shares @ $22.15

[Enterprising Investor]

First trade: 800 WGCBP shares at $21.50.

[56Chevy]

Continue to believe all unpaid, accrued dividends will be paid.

In other words a complete liquidation...which makes sense.

[Enterprising Investor]

I truly believe the $1 represents only a settlement for "damages".

What we do not know is if PFD Holdings, LLC can now continue to buy up shares at a discount in the open market?

DCAQP is another distressed preferred situation I have been following for years. I finally bought shares in May. It turns out that my timing was pretty good as all unpaid accrued dividends will be paid 9/15/14. DRA CRT Acquisition Corp. went private and kept its preferred holders in the dark just like W2007 Grace.

The company provided this link for information:

https://www.draadvisors.com/crt.aspx

[Enterprising Investor]

Continue to believe all unpaid, accrued dividends will be paid.

Initially, I was going to call the law firm. Due to a tight schedule in the morning, I sent an e-mail to the lawyers detailed in the press release. In all likelihood, Mr. Market will provide us with an indication before I receive a response. People in the know already exist.

[MrchntDeth]

Hi 56Chevy,

You asked EI for his thoughts (options) regarding dividends (or rather, the lack thereof), and not a single mention of repayment of dividends under the MOU.

My personal 2 cents is that it means that Goldman gets yet another bite at the apple in screwing over the Equity Inn, err, I mean the W2007 Graceful Toxic Wastedump, that Goldman created by concocting a scheme whereby they re-engineered a "reverse Midas," taking Gold (no pun intended), and turning it into a steaming hot pile of crap.

I think the fact that they are paying us a whopping $1.00 over the $25.00 Par Value, means that this is Goldman Sachs' way of eating at a Five Star Restaurant, stealing all the Silverware that they can shove down their pants without cutting off certain male parts, eating the entire meal, licking the plates, stiffing the restaurant owner on the bill, getting 60% of the bill knocked off, and then stiffing the waiter/waitress with a WHOPPING 4% tip!

$26.00 divided by $25.00 par = 4%

I thnk that the MOU's silence re: the dividends, or rather, the lack thereof (except for that $1.00 tip), speaks volumes about how Goldman Sachs makes their money: they steal it out of the mouths of innocent investors, they lie, cheat, steal, and then they pony up an offer for the 40% that they were not able to steal directly. Instead, they had to settle for stealing the ~ $15.00 in unpaid cumulative dividends, without accruing any interest on these unpaid funds, and paying a whopping $1.00 above Par to clear the way for everybody (at Goldman, that is) to make a killing off of the Raping that they put on a BUNCH of former Equity Inns Preferred shareholders.

At least, that's my shortened, polite version of how I am reading the MOU, and its failure to mention/discuss a crapload of dividends that remain unpaid. The silence is deafening.

At least that's how I see things. Would love to be wrong, but, I have a hunch that I'm unfortunately, not too far off the mark.

David from Dallas (aka, the Merchant of Death).

[56Chevy]

Not one word re: dividends unpaid or otherwise was in the MOU.

Your thoughts?

Marker:
W2007 Grace Acquisit (WGCBP)
$20.50 down -0.01 (-0.05%)
Volume: 400

[Enterprising Investor]

Treatment of the unpaid but accumulated dividends is unclear.

It looks to me as though a multi-year holder is getting one dollar for their suffering.

The $6 million fund will not go very far for those who sold.

I will contact the firm on Monday for clarification.

[mrholty]

Congrats. I sold my 100 shares yesterday to buy more BDCO as I viewed them on sale yesterday.

[56Chevy]

However, there is a still the possibility of the class action lawsuit moving forward. Redemption would certainly make that headache go away.

Bingo!!

W2007 Grace Enters Into a Memorandum of Understanding Proposing to Settle the Preferred Shareholder Class Action

[....]

W2007 Grace will be merged with and into a new company, and holders of Preferred Stock at the time of merger will receive $26.00 per share upon surrender of their shares of Preferred Stock.

[....]

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=105581841

* Congratulations Enterprising Investor!...this took tremendous ability my friend...luck is never involved double guessing actuaries and doing it with a high percentage of accuracy & success! It's truly impressive. Thank You for sharing your work!

[Paullee]

W2007 Grace Enters Into a Memorandum of Understanding Proposing to Settle the Preferred Shareholder Class Action

Chimicles & Tikellis LLP 7 minutes ago









MEMPHIS, Tenn., Aug. 22, 2014 /PRNewswire/ -- Chimicles & Tikellis LLP of Haverford, PA today announced that W2007 Grace Acquisition I, Inc. (OTCBB:WGCBP and WGCCP) ("W2007 Grace") and its affiliates have entered into a memorandum of understanding ("MOU") with respect to a proposed settlement of a class action lawsuit brought by W2007 Grace preferred shareholders David Johnson, Patrick Lynch, Roberto Verthelyi and Frederick Shearin against W2007 Grace and other defendants ("Action") and pending in the United States District Court for the Western District of Tennessee ("Court"), Civil Action No. 2:13-cv-02777.

The plaintiffs allege that the defendants breached, or aided and abetted the breach of, fiduciary and contractual obligations to W2007 Grace's preferred shareholders and sought to recover damages on behalf of preferred shareholders who held W2007 Grace Series B and C preferred stock ("Preferred Stock") at any time from October 25, 2007 to the present.

The defendants maintain that the Action has no merit and have moved to dismiss the Action in its entirety. On August 20, 2014, taking into account the litigation risks and costs and the benefits of avoiding those risks or prolonging the costs, the defendants entered into the MOU with the plaintiffs to resolve the Action. For the settlement to become binding, it requires the drafting and execution of a definitive Stipulation of Settlement ("Stipulation") and Court approval. The MOU contemplates the following key settlement terms:

The parties will seek certification of two settlement classes comprised of: (1) persons who hold Preferred Stock as of August 22, 2014 and through the date of the closing of the merger described below; and (2) persons who hold or held Preferred Stock and sold some or all of their Preferred Stock on or after October 25, 2007 and suffered a loss. Both settlement classes are subject to certain requirements and exclusions.
W2007 Grace will be merged with and into a new company, and holders of Preferred Stock at the time of merger will receive $26.00 per share upon surrender of their shares of Preferred Stock. If the Court preliminarily approves the Stipulation, W2007 Grace will distribute a proxy statement seeking the preferred shareholders' approval of the merger and certain amendments to the W2007 Grace charter, which will be described in the proxy statement. W2007 Grace will consummate the merger only if it obtains the requisite shareholder and Court approvals.
W2007 Grace will pay $6.0 million into a settlement fund which, following the deduction of certain expenses, will be distributed in accordance with a plan of allocation prepared by plaintiffs to persons who sold W2007 Grace Preferred Stock on or after October 25, 2007 and suffered a recognized loss. Defendants and their affiliates will not be eligible to receive a settlement fund distribution. Private sales to defendant PFD Holdings, LLC are also excluded.
Any balance remaining in the settlement fund will be distributed pro rata to persons who hold Preferred Stock as of August 22, 2014 and continue to hold their Preferred Stock at the time of the merger.
Subject to Court approval, W2007 Grace will pay plaintiffs' attorneys' fees and certain litigation expenses separately so as not to diminish the settlement consideration being paid to class members.
In addition, the Stipulation and consummation of any settlement will be subject to customary conditions, including: that notice of the proposed settlement will be sent to class members only if the Court grants preliminary approval of the Stipulation; and, final approval of the proposed settlement by the Court.

There can be no assurance that the parties will ultimately enter into a Stipulation, or that the Court will approve the Stipulation or the proposed settlement even if the parties were to enter into such Stipulation. In such event, the proposed settlement and benefits as contemplated by the MOU may be terminated.

Plaintiffs and the proposed settlement classes are represented by Chimicles & Tikellis LLP and Hagler Bruce & Turner, PLLC.

CONTACT INFORMATION:
CHIMICLES & TIKELLIS LLP
Nicholas E. Chimicles
Kimberly Donaldson Smith ([e-mail])
Catherine Pratsinakis ([e-mail])
One Haverford Centre
361 West Lancaster Avenue
Haverford, PA 19041
Telephone: [phone]
Fax: [phone]
www.chimicles.com

[h_man_investor]

The current market price is within the range of my expectations that I've posted.

[Enterprising Investor]

Can you explain why market prices remain fairly stable if the outcome is less as you predict?

[h_man_investor]

Regarding your third paragraph, it may be true the past that there was a "fact pattern" around downstream assets but those transactions occurred before the April 14th exercise of the warrant agreement.

After the exercise those 106 hotels aren't downstream of Grace. The FAQ is pretty clear on that.

I guess if you believe something else then you should be buying shares hand over fist at these levels.

[mrholty]

Thank you very much. That is what I was looking for.

I've assumed that these are all the complaint letters on this as they are up to this year.

[hurtrhino]

Holty, do you mean the comment letters on the going dark issue? If so:
http://www.sec.gov/comments/81-939/81-939.shtml

I do not think that you can obtain what should be numerous general complaint letters that have been sent to the SEC about how GS has tried to rip off the WGCBP stockholders (even if you filed a FOIA request).

[mrholty]

Does anybody have a link to the SEC page where complaints were filed against GS in this?

Has the SEC done anything other than take comments?

[Madmartigan]

Think about the high level sources and uses here - based on h_man's walkdown, there will be ~$498M of cash coming into Whitehall's hands ($227M of cash and $271M of additional mortgages and mezz, which I presume will be used to finance the other 20 hotels) and ARCHT will issue $451M of preferred equity interests in the two new HoldCo's that they will grant to Whitehall in consideration for the assets.

~$158M in CASH will be used to retire the mortgages encumbering the 20 hotels. We are now down to $340M in cash and $451M in pref interests against ~$284M in other liabilities ($50M Trust Pref, $146.3M in Pref B&C and ~$87M accumulated divs). CASH needs to be utilized to retire these obligations - per the charter, only shares, options or warrants to purchase shares of Junior Stock (which would need be issued by the company) can be utilized to retire Prefs and/or accumulated divs.

While this clearly demonstrates there is enough CASH coming into the system to service all of the debt liabilities (and in a plain vanilla structure, the path to full recovery), the clear issue pertains to what the Company actually "owns." As Enterprising Investor has pointed out numerous times in the past, the Company has demonstrated a very clear fact pattern that the money flowing in from the real estate assets is fungible across all of the downstream entities (i.e. proceeds the sale of an encumbered hotel can be used to pay down debt on the 106 hotel pool). This demonstrates to me that these Trust Preferred and Preferred liabilities would need to be serviced similarly given they are entity level liabilities.

[idkmybffjill]

Wanted to see your napkin calculations to compare to his.

[Enterprising Investor]

Update from the ARCHT 10-Q (8/14/14)

[...]

Pending Acquisition

On May 23, 2014, the Company entered into a Real Estate Sale Agreement to acquire (the "Grace Acquisition") the fee simple or leasehold interests in 126 hotels (the "Portfolio") from W2007 Equity Inns Realty, LLC, W2007 Equity Inns Realty, L.P., W2007 EQI Urbana Partnership, L.P., W2007 EQI Seattle Partnership, L.P., W2007 EQI Savannah 2 Partnership, L.P., W2007 EQI Rio Rancho Partnership, L.P., W2007 EQI Orlando Partnership, L.P., W2007 EQI Orlando 2 Partnership, L.P., W2007 EQI Naperville Partnership, L.P., W2007 EQI Milford Corporation, W2007 EQI Louisville Partnership, L.P., W2007 EQI Knoxville Partnership, L.P., W2007 EQI Jacksonville Partnership I, L.P., W2007 EQI Indianapolis Partnership, L.P., W2007 EQI Houston Partnership, L.P., W2007 EQI HI Austin Partnership, L.P., W2007 EQI East Lansing Partnership, L.P., W2007 EQI Dalton Partnership, L.P., W2007 EQI College Station Partnership, L.P., W2007 EQI Carlsbad Partnership, L.P., W2007 EQI Augusta Partnership, L.P. and W2007 EQI Asheville Partnership, L.P. (collectively, the "Sellers") which are indirectly owned by one or more Whitehall Real Estate Funds, an investment arm controlled by The Goldman Sachs Group, Inc.

The aggregate contract purchase price for the Portfolio is approximately $1.925 billion, exclusive of closing costs and subject to certain adjustments at closing. The Company anticipates funding approximately $271.0 million of the purchase price with cash generated through equity raises, funding approximately $976.0 million through the assumption of existing mezzanine and mortgage indebtedness and funding approximately $227.0 million through additional mortgage and mezzanine financing. The mortgage indebtedness that the Company expects to assume is for $865.0 million at an interest rate of London Interbank Offered Rate ("LIBOR") plus 3.11% and the mezzanine indebtedness is for $111.0 million at an interest rate of LIBOR plus 4.77%. Both the mortgage and mezzanine indebtedness are secured by 106 of the 126 hotels in the Portfolio and mature on May 1, 2016, subject to three (one-year) extension rights which, if all three are exercised, result in an outside maturity date of May 1, 2019.

Consistent with the terms of the Grace Acquisition, the Company anticipates that the remaining $451.0 million of the contract purchase price will be satisfied by the issuance of preferred equity interests in two newly-formed Delaware limited liability companies, ARC Hospitality Portfolio I Holdco, LLC and ARC Hospitality Portfolio II Holdco, LLC, each of which will be an indirect subsidiary of the Company and an indirect owner of the Portfolio. The holders of the preferred equity interests are entitled to monthly distributions at a rate of 7.50% per annum for the first 18 months following closing and 8.00% per annum thereafter. On liquidation, the preferred equity interests will be entitled to receive their original value (as reduced by redemptions) prior to any distributions being made to the Company or its shareholders. After the earlier to occur of either (i) the date of repayment in full of currently outstanding unsecured obligations of the Company in the original principal amount of approximately $63.0 million, which represents the portfolio owned assets and joint venture promissory notes, or (ii) the date the gross amount of IPO proceeds received by the Company exceeds $150.0 million (See Note 7 - Promissory Notes Payable), the Company will be required to use 35.0% of any IPO proceeds to redeem the preferred equity interests at par, up to a maximum of $350.0 million for any 12-month period. The Company is also required, in certain circumstances, to apply debt proceeds to redeem the preferred equity interests at par. As of the end of the third year following the closing of the Grace Acquisition, the Company is required to have redeemed 50.0% of the preferred equity interests, and as of the end of the fourth year following the closing of the Grace Acquisition, the Company is required to redeem 100.0% of the preferred equity interests remaining outstanding at such time. In addition, the Company has the right, at its option, to redeem the preferred equity interests, in whole or in part, at any time at par. The holders of the preferred equity interests will have certain customary consent rights over actions by the Company relating to the Portfolio. If the Company is unable to satisfy the redemptions requirements, the holders of the preferred equity interests will have certain rights, including the ability to assume control of the operations of the Portfolio. Due to their characteristics and the fact that they are mandatorily redeemable, the preferred equity interests will be treated as debt in accordance with accounting principles generally accepted in the United States of America ("GAAP").

Pursuant to the terms of the Grace Acquisition, the Company’s obligation to consummate the acquisition of the Portfolio is subject to certain customary closing conditions. Among these customary conditions, the Company must enter into replacement franchise agreements for each hotel and the Company must obtain the consent of certain ground lessors for certain hotels. The Company was required to make a $50.0 million earnest money deposit, with an additional $25.0 million due if the Company exercises its right to extend closing of the acquisition to December 15, 2014. This right was exercised on July 21, 2014 (See Note 15 - Subsequent Events).

[...]

Note 15 - Subsequent Events

Grace Portfolio Closing Extension

On July 21, 2014, the Company entered into an amendment to the Real Estate Sale Agreement for the Grace Acquisition to defer the closing date to December 15, 2014. As a result of the amendment, the $25.0 million supplemental earnest money deposit is due to the Sellers on September 19, 2014.

[Enterprising Investor]

My view differs from that of h_man_investor.

Is that what you are looking for?

[idkmybffjill]

Enterprising Investor, any comments on this?

[Missjd]

Nonrefundable deposit of $50 million has been paid according to the purchase agreement.

[Perbert]

Make that American Realty Capital Hospitality.

[Perbert]

American Capital Realty Hospitality filed an amendment to its registration statement with the SEC yesterday. One item: it has sold only 2 million shares as of 7/29/14. That means that only $40-some million has come in so far. They hope to sell $271 million worth of common. They have a very long way to go. Maybe this is as expected at this point, but maybe they are struggling to sell enough common.

[Hank Moody]

EI, there is plenty of value.

From a $1.925B deal, there is plenty of value to pay our shares whole. The question is whether Goldman will keep extra money for itself rather than pay the public shares.

With $1.925B here, you can bet that Goldman is getting full value on its Grace shares, even if we don't get it on ours.

BTW, I think the ARC prefs are a placeholder while ARC completes its common stock offering that is underway.

[h_man_investor]

Very simply:

$325m allocated purchase price
-$76m of which is ARC preferreds
Leaves $249m cash
Less $158m mortgages
Leaves $91m cash

There is the 3% interest that is worth $7m cash and $11m ARC preferreds

You now have $98m in cash and $87m in ARC preferreds, mezz debt of $50m, $86m in accrued divs, and $146m in preferreds.

Most of the 3/31/14 cash/receivables well be used to meet current liabilities.

[56Chevy]

Not the actual balance sheet... I'm talking about sharing your math..can you share that? Ty.

[Enterprising Investor]

And so will I!

If there is truly not enough cash to go around, a tender offer will ensue.

However, there is a still the possibility of the class action lawsuit moving forward. Redemption would certainly make that headache go away.

Goldman Sachs is about to settle Joel I. Sher, Chapter 11 Trustee for TMST, Inc. v. Goldman Sachs &Co., United States District Court for the District of Maryland, Case No. 11-cv-02796. Sher sued for $71 million. Although the terms are redacted, the actual payment cannot be hidden from the MOR.

[h_man_investor]

It's all public information.

[56Chevy]

I urge anyone to show me an analysis that there is enough value to cover par let alone the accrued.

You must be working off a balance sheet ...that's great ..can you share that with everyone else?

[h_man_investor]

Before someone asks why Whitehall/GS would screw over their own preferreds keep in mind that for every dollar they avoid paying out to the preferred shareholders, yes they give up 58.8 cents but gain an additional 41.2 cents. It's just going from one hand to another.

With a payout of the accrued interest, PDF will more than get their investment back and then some.

[h_man_investor]

Historical basis means much less than future return expectations. The bottom line is that the IRR will decrease the longer they hold onto a security that is returning on a yearly basis 8%.

Furthermore, the goal of a private equity fund is to realize a gain as quickly as possible because that's how they get paid. To suggest GS would prefer to retain the ARC preferreds to defer long term taxes all the while deferring their carried interest didn't make a bunch of sense.

If they were really concerned about taxes (taxes paid by the LPs, nonetheless) they works figure out a way to avoid paying ordinary income on the accrued dividends. I urge anyone to show me an analysis that there is enough value to cover par let alone the accrued.

Me thinks that Grace will pay the accrued, then pay a dividend to the equity holders with the remaining cash. Grace will get stuck with the ARC preferreds, the mezz debt and the Grace preferred.

If you don't think this can happen, after deferring the non-cummulative preferred SKRUF paid a one time dividend of $5m then paid out +$100m to the equity holders Mass Mutual & Cerberus.

[Enterprising Investor]

Aren't you forgetting something?

PFD Holdings, LLC was buying dollar bills for far less than a dollar.

An 8 percent rate on a $25 par preferred stock produces $2.00 in annual dividends. If an investor paid $8.33 per share, the cash rate of return would be 24 percent per year ($2.00/$8.33).

In my case, if the all of the dividends are paid, it would represent nearly twice my cost. I would still be owed par.

PFD Holdings, LLC is no different.

[Enterprising Investor]

Initial WGCBP purchases made in August 2011 at $1.95 per share.

As I mentioned earlier, those shares were in a taxable account. I basically sold them to my IRA at $7.14 per share in February of last year.

[h_man_investor]

Whitehall is not concerned at deferring long term capital gains taxes and more interested in maximizing the IRR and getting paid which they only do when a transaction is realized. Clipping an 8% coupon on a going forward basis will certainly lower the +100% IRR PFD Holdings has realized.

It's simple math that there is not enough cash left over to pay all the accrued interest let alone the par value. I urge anyone to demonstrate otherwise.

But you bring up an interesting thought and an assumption that I made was that the ARC preferreds would be a listed security. It may not be which means that Grace may hold onto the security, payout the dividend as a dividend on the Grace preferreds. However the payments won't cover the preferred divs.

[Hank Moody]

Goldman in #3 in the attached link

http://www.banking.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=ec4473bb-3ff7-45eb-8ca5-138d0ca04c1c