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What will be ACST patient population? They can't compete with AMRN on under 500 TG levels since they have no trial for that, so maybe just the smaller 500-1,500 hyperTrig population of the Trilogy trials? However they probably won't be best in class since they don't have outcomes trial whereas Vascepa proved to reduce cadio events. Right?
Nice post, but how do we know "Torreya results usually within 30 days" ? How was that 30 day length determined or discovered? Thanks.
I do not know what options, if any, we will have if this deal is approved.
Yes Lex, and we will get, per the DS, a 0% recovery of the 10MM claim.
The Disclosure statement shows Class 16 expected to get 9% return (max, based on speedy confirmation), and (our) Class 18 gets 0%.
But what makes you think the class 18 claim is worth anything?
Floor? How about cieling.
Me thinks this values us at .09 plus whatever the Class 18 claim is worth.
Order says in favor of defendant. Not sure what class that puts us.
Since the WMI POR includes creating a Litigation Trust to address ongoing WMI litigation, why is the following not a logical opinion to expect from the judge regarding the LTWs:
Instead of 12 vs 18 vs 21 class warfare, why not rule to alter the POR/GSA so that the Anchor litigation & proceeds are clawed back from JPM (even the government handling the Anchor litigation claims JPM is not a proper owner/party in the Anchor litigation) and require it to be handled to its conclusion by the newly created WMI Litigation Trust for the future benefit of the LTW holders?
That way the POR can go through to confirmation, they get the $337MM reserve for the waterfall, the Equity Committee gets what it negotiated for without being diluted, and we get paid when the government finally pays the Anchor litigation, or, like American just did, settles.
Not that I would like this to happen, but it does seem like something that would make life easy on the judge.
To clarify the clarification, judge said it will "not be out by tomorrow" (she did not say "this week"), "but it will be out by Tues". So technically, Sat - Tues are all possible.
Yes, this is splitting hairs, but this opinion is the big enchilada.
Good idea. Here's my suggestion for the paragraphs they left out of the Warrant Agreement. It's only a first draft so might need some adjusting:
"Payment of such litigation proceeds to warrent holders shall, however, be subordinate to any particular large bank of ill-repute who, through the complacency of the US Government and certain bankruptcy court judges, would illicitly obtain ownership of substantially all WMI assets.
Such subordination is necessary so as to (over) compensate such bank of ill-repute, and certain collaborating hedge funds, for their efforts which would likely include obtaining unprecedented influence over any future WMI estate counsel."
Interesting reading and info wallstreet.
Makes me want to go re-read Art's rebuttal to the subordination argument.
Good points gophiipgo. Which still leaves me wondering, what could the NOL's actual value be - such as to an acquirer with a large amount of taxable income.
Many were disappointed with the EC's settling their mediation for just Newco if it was worth only $200MM. But, if the NOL's had some real value, you can see why equity wanted Newco - it allows the NOL's to be maintained as in your point 1.
Thanks login.
I was aware of that court valuation; though I don't know if it accounts for value to a possible acquirer who could use the NOL's to promptly reduce a sizable taxable income. The paper I linked from bopfan makes a compelling argument.
philipmax,
I believe you are referring to the tax refunds that WMI ended up splitting with JPM and FDIC. Totally different from the tax NOL's that I am trying to determine a value for.
Thanks Jared,
Now for the next question.
Continuing with this worst case scenario (that we are deemed equity) - or maybe it's not the worst case after all ;)
Messages on the Wamu yahoo board claim that newco also gets $17.7BB in WMI's Net Operating Losses (NOL's). bopfan suggest this is a secret tax asset that is worth a lot. Well, I challenged her on that because I didn't believe it and bopfan gave me an interesting article about how Wells Fargo bought Wachovia and got to use an annual amount of their NOL's equal to the total NOL value divided by Tax Exempt Bond Rate.
http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_W/threadview?bn=86316&tid=894478&mid=894622
http://www.wamu-shareholders-resources.com/documents/irsNotice2008-83-final.pdf
Well, if that article is true and applicable to us, then, assuming a best case 20 yr NOL lifespan, 35% tax rate, and that we get 74% of the common equity pot, which is 30% of Newco (ie, 30% of the NOLS); then my math estimate the NOLs are worth up to $2.48BB to an acquirer of Newco, of which the LTW's share would have a full value (max, best case) worth of $550 MM, or a whopping $4.87 / LTW.
Now, I don't expect that, as I'm not convinced it would legally for us like this, but, I think there is merit to discussing if these $17.7BB of WMI NOLs really do have any value and if they would come to common equity, thus us, if we are deemed equity.
Perhaps some of the expertise on this board could shed some light?
Jarad,
Why does the proper conversion rate, as stated in the warrant agreements no longer apply???
We get converted to common based on the 30 day average price of the common. Even the UCC attorney speaking against us at out trial's most recent closing arguments said this is how our claim should be calculated, using WAMUQ's closing prices.
So, based on an assumed 7 cents wamuq 30 day price, that gives us 337MM / .07 = 4.8BB common shares. Considering there are currently 1.7BB common shares outstanding, we get 4.8/(4.8+1.7) or 74% of the common equity pot (which is values at $57MM worth of newco) , or $42MM. Divide into into 113MM LTW = $.37 / LTW.
(This is of course, assuming we lost our adversary proceeding and were deemed equity.)
So,
DIMEQ wins; take from WAHUQ's pot.
DIMEQ loses; take from common equity's pot.
What I wonder about is, if we are deemed equity, do we get converted into common shares at the same conversion rate based on the 30 day average of wamu common stock, and then we get our pro-rata share of 30% of newco based on the new total of outstanding shares ?
I think you are miscalculating taxes. Read the 8k at the top of the DIMEZ message board. You need to take out full tax rate even if there is no tax gross up awarded.
My models have full intrinsic value between $1.11 and $1.84 depending on the gross-up award (between $0 and $134M) and on what the highest Fed & State tax rate will be when used to calculate DIMEZ holder's share (37.5% or 46.05%).
Since Wamu is expected to lose money for the next year or 2 its hard to make a case that they will pay much taxes on this award, thus the tax gross up may be small or nill; and we get screwed by having Wamu still take out an amount from the award as if it was taxed at the highest tax rate for banks (per the 8k). Oddly, this may mean that if the award is post-poned (through appeal or whatever) to a year when Wamu is profitable and paying a high tax rate, a tax gross-up may increase significantly and that helps us.
I am also modelling $50M for estimated legal expenses since this case probably went on twice as long as expected.
I think the price of the warrants are so low because of concerns with Wamu even though a Wamu BK might not effect DIMEZ. In fact, Wamu's financial problems may (or may not) prompt the Feds to pay the award vs appeal since paying this would look better than, and reduce, any needed taxpayer/FDIC bail-out if Wamu goes bust. Though I'm just wildly speculating on this last point.
That's how I see it. If anyone sees things differently I'd love to know.
CDrucker
wize-guy:
Why do you think the tax gross up will bring the total award to such a high number as $600M since Wamu is expected to lose money, (per analysts expectations) thus probably not have much taxable income through at least 2010?
http://finance.yahoo.com/q/ae?s=WM
Also note that the amount to DIMEZ holders will be net of Wamu's takeout of the corporate highest tax rate, even if the tax gross up is less (see the 8k in the board header.) I suspect we get screwed on the tax issue and I'm not happy about it.
I would think what is good for WaMu & WaMu shares is good for DIMEZ. The better WaMu can be expected to do, the higher their expected future taxes thus the higher the tax gross-up amount should be in the court's future decision. BTW, the DIMEZ/WaMu agreement screws DIMEZ holders out of some money because they keep a percent of the award based on the highest tax rate a bank could have, even though WaMu's actual tax rate may be much less since they are currently losing money.
Also, if WaMu does better as a bank, there is less fear of the unknown from a new set of term for DIMEZ which would happen if WaMu goes under or are bought.
As per rud's message, maybe Astoria'a quick decision was because of the small award; they claimed a few hundred mill, and got $16M.
Sickening miscarriage of justice that it takes the judge this long for Anchor
It seems like this is a serious mis-justice. Taking 20 years to get to court, then years more after trial, all without paying interest. But I'm sure the judge is getting a nice paycheck at taxpayer expense during all this for doing nothing.
I would be happy to see someone take legal action against the judge and court.
It would even be nice to see 60 Minutes or some other media bring some publicity to this.
C'mon Feds. Why don't ya try to support a major bank that's taking it on the chin lately by paying them what you've owed them for over 20 friggin' years!
Hey Judge, does the concept of 'due process' have any meaning in your courtroom?
Anyone have any idea what the litigation costs might actually be? I know the 8k uses a $26 Million figure and I'm wondering if that's in a realistic ballpark if a decision were announced now.
Looks like someone had to liquidate some Dimez to cover a margin call for their shares of Countrywide ;)
Another link of our ticker to WM.
"Washington Mutual Inc. (NYSE:WM) (NASDAQ:DIMEZ) , another major lender of option and interest-only ARMs, echoed those concerns in a similarly bleak Securities and Exchange Commission filing that warned the subprime problems are cropping up in higher-quality mortgages, too."
http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-18827885.htm
Well, we're back to .27. I wish it was on higher volume.
Hopefully this is the calm before the storm.
I thought it interesting to have our ticker included with WM and the rest of this group. Though I doubt it's happening, wouldn't it be nice if someone's lobbying to have a DIMEZ court decision soon?
http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-18723871.htm
Banking group spent $1.24M lobbying
August 07, 2007: 11:38 AM EST
Aug. 7, 2007 (Thomson Financial delivered by Newstex) --
WASHINGTON (AP) - The Consumer Bankers Association spent $1.24 million in the first half of 2007 to lobby the federal government, according to a disclosure form.
The trade group, lobbied on numerous issues, including bankruptcy, student loans, data security, mortgage reform and electronic commerce, according to the form posted online Thursday by the Senate's public records office.
In addition to Congress, the group lobbied several agencies, including the Federal Deposition Insurance Commission, Federal Reserve System, Office of Thrift Supervision, Treasury Department and others.
Citigroup Inc. (NYSE:C PRR) (NYSE:C PRS) (NASDAQ:PLJC) (NYSE:C PRF) (NYSE:C PRH) (NYSE:C PRG) (NYSE:C PRM) (NYSE:C) , U.S. Bancorp (NYSE:UBS PR) (NYSE:USB PRE) (NYSE:USB PRD) (NYSE:USB PRC) (NYSE:USB) and Washington Mutual Inc. (NYSE:WM) (NASDAQ:DIMEZ) are among the nearly 80 companies that are members of the Arlington, Va.-based trade group.
Under a federal law enacted in 1995, lobbyists are required to disclose activities that could influence members of the executive and legislative branches. They must register with Congress within 45 days of being hired or engaging in lobbying.
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Another reason HSOA on the way up; some substantial contract awards recently announced
I thought his hit piece on HSOA yesterday was weak. TO me, he seemed to be saying:
"With the quarter's results it looks like I was probably wrong all along, but since there is still a possibility I might be right, I'm staying negative."
Good quarter and good CC for HSOA. Looking forward to seeing how trading goes tomorrow.
From my very brief review of this decision (which is totally unrelated to us), it seemed to have taken Judge 'swifty' almost a year after trial to say the case is not in his jurisdiction.
freeferall, I wondered if the appearance of these letters coincided with the recent rise is the warrant prices. Maybe some folks got the letter and opted to add to their positions?
Odd. Has anyone gotten these letters before? Is this an annual thing they do around this time of year?
Well, at least the "no trades" can be easily explained. Were you aware of the holiday in US and Europe?
Someone must have figured out that even with a 50% chance to win and be worth $2, and 50% chanch to lose and go to 0, anything under $1 is a bargain on a risk/reward ratio basis.
And I feel we have a much better than 50% chance to win most of the award we are seeking.
Thanks for the post on HSOA. I've been loading up at prices under $5. I got quite encouraged listening to the last conference call and their recent awards seems to suggest things are coming together for them. Any additional revenue from an active hurricane season would only improve their already strong outlook.
I suppose DIMEZ is deceptively more liquid than its low ave volume may suggest. And that's a good thing.