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Mr."8" - Best Post in "PLAIN ENGLISH"...
Is the rade mark WMI's?
Are you positive and sure that W. Mutal trade mark belongs to WM Inc ?
What about W.Mutual Bank trade trade mark? Is it WMI's too?
I tried your link but it doesn' work.
If this is really true it will be really important. For a possible future as well as for possible litigation ( as you very well mentioned)
Thanks for the input and thanks in advance for your confirmation.
Cheers.
For burn rate ... check the 8k filing..
WMI has a very low recurring expenses ( compared to the expected cash ) .. the ones significant are the diverse attorney's ( BK, Taxes, Litigation, others, etc )services that have been hired. This portion as well as the one of cash transfers to subsidiaries may increase.
Cheers...
Thanks Climber..
The NOL is not even waiting the stroke of a pen.
It's done, and it's WMI's.
If someone wants to challenge it, it would need to open a new litigation with the taxes authorities. As far as this court reaches, the NOL is protected - transaction restriction - and it's WMI's ... written in the motion and in the ORDER already signed by the judge.
Unless I missed something this is the current status.
Cash is important these days.
4.4B evaporated out of JPM accounts in public can also damages severly JPM pps. Maybe even more than a dilution.
The level of dilution in an eventual buyout by merge depends on the price assigned to WMI shares.
As you wisely point out it's unlikely they can afford above $1 these days. But a dilution at $1 may be better for JPM pps than getting these 4.4B evaporated in public.
Maybe when JPM stock was at $40 it was possible something around $2 to $3 considering cash, Nol and subsidiaries plus the fact that the incremental debt they would assume is mostly a long term debt.
But now, I agree that with anything in the range $1-$2 should make us in the board very happy.
However my doubt is .. $1-$2 would make happy enough TPG and the other large holders as to accept it. Or their ego and need to recover would make it unacceptable for them ... if this is tha case ... we will have to be patient and wait..
I guess the 4.6B included the 4.4B that WMI expects to have secured by January.
8k, shows a forecasted cash flow.
Now my interpretation/guessing ...
What I see is the judge allowing WMI keep spending money. She approved inmediatly every services hiring requests.
I guess that if the judge would perceive unlikely that 4.4B would go to WMI, then her pereception would be that there are only 200M$ in cash. If this would be the case, then she would order to stop any expenditure or transfer to subsidiaries - like the 7M she approved some days ago - and would be driving the process towards a fast liquidation.
Ask Wamook who posted it 42380.
I guess it's a formal thing they have to do, just in case any of the parties reject their role due to possible colusion.
But I think Wamook has been able to get more jucious conclusions out of it.
Wiped out? No money to sustain lawsuit?
( I posted something very similar yesterday but most of you were sleeping, I feel compelled to repost is again).
Of course it's good to have bond owners and prefs owners aligned. I am sure WMI is working to align everyone possible in this. But as long as WMI keeps paying its debts/interests to creditors and the interests to prefs. it cannot be forced by any of them to a solution that do not please also commons.
So it's not a must to have them aligned to sustain a 2 year lawsuit (if needed ?).
1.- Out of WMI $8B debt not even $1B is short term FY09 (*). This drives two conclusions:
- NO WIPED OUT. As soon as WMI get the 4.4 or a portion of it, WMI will be able to pay any debt, iterests, etc for a long time. Check the 8k filing, .. the recurring expenses are affordable and will not burn the cash needed to pay FY09/10 debt, ... if there is cash to pay creditors when it's due to pay them .. then they have not any right to force liquidation, or to force an exchange of bonds for equity that would be the risk of commons getting worthless..
Read 8k filing …$4.6BB cash left at the end of Jan 2009
- SUSTAINING LITIGATIONS. There is also money to sustain the lawsuit. As a matter of fact WMI is already paying for it and - again checking the 8k filed with expenses report and cash flows - it seems it will be able to keep litigating for long time ( even multipliying by 3 or more the litigation expesnses). The key point -a gain - is that as holding co, WM Inc as very low expenses. They may need to move money to subsidiaries ( as they already did, see 8k) , that is an investment, not an expense.
2.- Even in the very very worst case, the main owners of common have enough financial power to keep any litigation ( again, if needed ?) for a long term. There is too much money at stake for them as to let it go for not helping WMI to keep paying a legal process.
-----
Scary as it is due to the pps evolution, I haven't seen yet - since the original BK filing - any real sign of WMI not being able to pay creditors: prefs. interests included.
The pps is a bad sign, no doubt. But it is so for the whole banking sector.
In this environment pps can keep droping until news come, but this would not change fundamentally any of WMI chances to get out of the BK - not wiping out commons - and/or get bought by someone happy to exchange equity to grasp 4.4B cash, $7B tax benefits and make some more money selling the subsidiaries in due time.
(*)"Voluntary petition for WM Inc" - Court Doc: 0812229-001
Exhibit A, page 4 of the document.
http://www.kccllc.net/documents/0812229/0812229080926000000000001.pdf
4.4B Cash is the king!!
I think in today's environment some banks may be willing to exchange their equity for WMI equity - so accepting getting diluted - in order to grasp 4.4B of fresh cash + NOL + Subsidiaries.
If any bank would like to raise 4.4B in the market today it would be extremelly difficult to do.
Only 1B of 8B WMI debt is due to be paid in FY09.
Additionally this may be a real nightmare for JPM. If the judge rules the 4.4B in favor of WMI, ... it will be public that 4.4B in JPM free-of-interest deposits will evaporate from JPM liquid assets.
In the current environment this could be a killer for them.
Not WMI specific.
I really think these last days are lead by the market fear and panic about anything related to banking. Nothing specific about WMI.
Wiped out? No money to sustain lawsuit?
I read that one yesterday in yahoo. But I don't agree too much with the concept.
Of course it's good to have bond owners and prefs owners aligned. I am sure WMI is working to align everyone possible in this. But as long as WMI keeps paying its debts/interests to creditors and the interests to prefs. it cannot be forced by any of them to a solution that do not please also commons.
So it's not a must to have them aligned to sustain a 2 year lawsuit (if needed ?).
1.- Out of WMI $8B debt not even $1B is short term FY09 (*). This drives two conclusions:
- NO WIPED OUT. As soon as WMI get the 4.4 or a portion of it, WMI will be able to pay any debt, iterests, etc for a long time. Check the 8k filing, .. the recurring expenses are affordable and will not burn the cash needed to pay FY09/10 debt, ... if there is cash to pay creditors when it's due to pay them .. then they have not any right to force liquidation, or to force an exchange of bonds for equity that would be the risk of commons getting worthless..
- SUSTAINING LITIGATIONS. There is also money to sustain the lawsuit. As a matter of fact WMI is already paying for it and - again checking the 8k filed with expenses report and cash flows - it seems it will be able to keep litigating for long time ( even multipliying by 3 or more the litigation expesnses). The key point -a gain - is that as holding co, WM Inc as very low expenses. They may need to move money to subsidiaries ( as they already did, see 8k) , that is an investment, not an expense.
2.- Even in the very very worst case, the main owners of common have enough financial power to keep any litigation ( again, if needed ?) for a long term. There is too much money at stake for them as to let it go for not helping WMI to keep paying a legal process.
-----
Scary as it is due to the pps evolution, I haven't seen yet - since the original BK filing - any real sign of WMI not being able to pay creditors: prefs. interests included.
The pps is a bad sign, no doubt. But it is so for the whole banking sector.
In this environment pps can keep droping until news come, but this would not change fundamentally any of WMI chances to get out of the BK - not wiping out commons - and/or get bought by someone happy to exchange equity to grasp 4.4B cash, $7B tax benefits and make some more money selling the subsidiaries in due time.
(*)"Voluntary petition for WM Inc" - Court Doc: 0812229-001
Exhibit A, page 4 of the document.
http://www.kccllc.net/documents/0812229/0812229080926000000000001.pdf
Same pattern... most orders at the bid are extremely small, most at the ask are significant...
My God !!.. City is -19%...
what's up there ???
They are supposed to be well capitalized after Gov's injection aren't they?
could it be tha the FDIC is at work again with this new target?
I am not familiar with US taxes model.. sorry.
correction BAC -6% not -6$
sorry for that.
My advice is to stay cool ...
besides the obvious pain and fear .. today is a very very stormy day (and week) for banks ...
City is down - 17.7% today
JPM again down ..today at -11% ( $25 today .. $40 less than 2 weeks ago)
BAC ... -6$
.. not any storm last forever ..
WMI future cannot get understood based on these days behaviour.... in the future it may be brilliant, good or bad .. ( I am sure not wiped out or liquidated ) ... still uncertain ...
.. but I would advice not to make decisions just for these days ...
... it's my opinion and I am long in Wamuq, so maybe I am a bit influenced by my own position.
Only $864M sh.term debt for FY09 !!!
If I understand it well out of the 8.2B, only 864M are due for FY09. This means that WMI will be in a very healthy position from cash flow prespective as soon as it get access to the 4.4B or even to a portion of it.
Creditors due to get paid in FY10 or beyond are by no means in situation ( or even iterested in doing it ) to force a liquidation of WMI or to become owners in exchange of the debt.
There will be plenty of time to maximize as much as possible the potential value of the remaining 27B assets ( surely much less by now but still significsnt because there is not any urgency to sell these assets off to pay short term creditors)..
Now I understand why the judge is allowing WMI to hire attorneys and other services and leting WMI play its cards ... she see not any problem to pay short term debts ....
Page 4 of original BK filing document 0812229-001
http://www.kccllc.net/documents/0812229/0812229080926000000000001.pdf
Only $505M+$359= $864M
Even if I interpret in the worst case the foot note 4 that mentions 500M instead of 359 ( I do not why ) .. its only 1.5B for FY09.
Encouraging ..8k form filed by WMI
The cash flow shows limited expeses exept in Advisory services - all the lawyers authorized by the judge - as well as the 7.5M$ transfered to its subsidiary.
I doubt the judge would approve this if there would not be a future for WMI.
She has to protect the creditors interest as well as the debtor's one and she has seen more BK processes than anyone of us.
I think she keeps approving because she see future in the way WMI is handling its matters.
Answer to Wamook "the NOL has not been decided yet"
I agree with you that the motion and the order resulting out of it is about "limitation to transfers than could jeopardize NOLs rights".
I disagree about the fact that is unclear that the NOL's taxes benefits are a WM Inc rigth.
The one concerned about preseving its right by limiting shares transfers was the one who initiated the Motion: WM Inc.
The Motion and the Order state clearly that this is for the "Debtor", .. = WM Inc.
The foot note only reflects two simple facts:
- that the BK court is not competent about taxes litigations
- that the parties what to make clear that by accepting this order they are not limiting their potential future rights to litigate in front of the taxes administration about this topic.
It's just that they do not what to tie their hands for the future by accepting the order. But there is not a single word in the order that states that this tax benefit partially belongs to JPM or anyone else than WM Inc.
An example from the same side: the discussion about the 4.4B. Here JPM is not adding a foot note, but directly challenging the total ownership of WM Inc. Thanks god, in this case it seems the BK court can really rule and get it settled within this process soon. But here is real and current discrepancy about ownership and therefore WM Inc position was not contested with foot notes, but with motions.
On a paralel view from the other angle:
Does anyone (legally) doubt that today WMBank belongs to JPM? .. sadly not.
However WM Inc would never accept in any court an order with such statement without preserving - in an equivalent foot note - its right to litigate in the future about this ownership. But, again sandly, for the moment WMBank assets/liablilities are in JPM books and this can pass an audit. Only if a future litigation challenges this ownership successfully, would JPM need to take this our of its balance sheet.
Equally, in my opinion, and only until JPM or FDIC open a litigation and win about it, the NOL rights are WM Inc rights and add value to WM Inc.
In summary the motion and the order were not about who owns the NOL rights but about preserving these rights for WM Inc. , ...
.. for the moment - and unless the other parties in the future litigate and win in other courts/instances on the contrary this is preserved for WM Inc.
Lehman against JPM !!
Another front for JPM.. they better settle WM soon.
from yahoo's board ..
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http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_W/threadview?m=tm&bn=86316&tid=31343&mid=31343&tof=2&rt=2&frt=2&off=1
I dont know if this has been posted, but WMI isnt the only banking institution there going to have trouble with. apparently they stuck it to Lehman Brothers and are about to be sued.
From Times Online:
JP Morgan has been accused by its Wall Street rivals of dealing the final hammer blow that forced Lehman Brothers into collapse in a sensational claim that threatens to spark a colossal legal battle.
The giant American bank is alleged to have frozen $17 billion (£9.6 billion) of cash and securities belonging to Lehman on the Friday night before its failure.
According to Lehman’s biggest creditors, this was what precipitated the liquidity crisis that embroiled the firm, forcing it into Chapter 11 bankruptcy protection on the morning of Monday, September 15....
The funding lines provided to Lehman to finance its everyday operations amount to $188 billion, according to court filings.
The creditors are now demanding that JP Morgan open up its books to the bankruptcy court to allow the transactions to be assessed.
“The creditors’ committee understands that LBHI [Lehman Brothers Holding Inc] had at least $17 billion in excess assets which were held at JPMC [JP Morgan Chase] on the Friday going into the weekend before its bankruptcy filing,” the documents said.
“The creditors’ committee further understands that, on September 12, 2008, JPMC refused to allow LBHI access to its excess assets and instead ‘froze’ LBHI’s account. In freezing LBHI’s assets, JPMC was purportedly
Today:
- NOL Order approved .. it's for WMI, although there is foot note agreed by all parties. Basically the footnote is because the judge cannot rule on future taxes legalities that the mentioned parties could rise - it's not her role - , but in principle and clearly stated it's for WMI
- Waiting for the approval/rejection of Brande's request about rise the restriction on the restricted shares they have.
No more significant news .. except... pps dived in low volumes. Not a big sell off but clearly down.
40872 .. the 3rd one up in the Post list
remarked
NOL tax benefit is $7B
NOL is $20B this gives 35% tax benefit = $7B
Aprox $300k traded until now.
With only $300k this has dived 8%.
In my opinion the small orders at the bid in the range of hundred units are from MM.
The retail normal shareholders are the ones been driven down following these small orders in panic and selling in the 1000 to 10000 units. These shareholders are the ones not following the day to day court news or boards but just checking pps from time to time and end up selling out in despair.
The MMs are succeding to move it down.
Now the market capitalization of this company is less than $70M. A company with many subsidiaries, $B in assets ( more then debt) and $B in tax deduction rights.
Life is interesting, no doubt ... this will be quite a story.
Does it ring a bell?
Sell orders at the bid for 100, 250, 300 shares !!!
WM Inc is getting ready to sue ...
either JPM or FDIC or both.
They just hired lawyers specialized in this. Besides hiring lawyers specilized in BK and in Taxes, they already requested to court and got approval to hire services specilized in these litigations.
Will they do it or not?
The fact that they did not sued yet:
- may be just a matter of time ( court approval for these hirings happened just some days ago )
- may be because they are using it as a menace to add pressure in a possible negotiation behind the scene.
In business in general public scandals are not good. Such a litigation will get a lot of public visibility. This could even impact JPM stock. Let's not forgett that the higher the value of JPM stock, the easier for them to accept an eventual buyout based on exchanging WMI stock by JPM one.
If I would be TPG I would use it as a resource only if there is no chance to get a good negotiated solution.
In any case I guess that the fact that they did not do it yet is not a relevant sign now. I would consider this a relevant sign if in some weeks they do not start it yet: hiring expensive lawyers and not using them would be strange.
On the other hand I see relevant that the judge - with more experience in BK processes than anyone of us - keeps approving hiring expensive services to defend WM Inc. If the judge would perceive this case heading into liquidation she should avoid increasing expenses that may be needed to pay creditors.
Sadly - and likely until Dec 3rd - we can just count with signs and speculate based on these signs. Nothing for sure yet. This is the uncertainty that keeps the stock so cheap.
Interpreting NOL footnote 3
This intrpretation come from other board:
----------
Footnote 3:
"This order does not affect the rights, titles, or interserts, if any,
WMB,WMBfsb, FDIC, JPM with respect to the attributes; provided however
that the foregoing shall not excuse JPM from any of the restrictions,
requirements, or procedures on or regarding acquirsition, disposition
and other transfers contained in this ORder to the extent any of the
forgoing would be otherwise applicable to JPM"
This is my take line by line, laymens term:
FDIC, JPM, WMBank, have no dispute as to the NOL belongs to WMI as of
now; provided however, should JPM plan to acquire or reveal ownership
then this motion regarding NOL would apply to JPM.
JPM just want cover all their bases and all options on the table? Could be a hint of whats to come or JPM leaving their options on the table.
What do you think?
-------------
Any comments from someone sound in these matters?
Today's agenda in court.
As far as I know in court we can expect today:
1.- Aproval of NOL Order with the agreed wording in foot note 3
2.- Acceptance or denial of Brande's request to transfer the restricted shares
Impact of these items:
----------
1.- For the good or the bad the NOL topic would be firmly settled from now onwards. This reduces uncertanity.
----------
2.- If Brande's request is accepted, then nothing significant changes.
If Brande's request is denied .. do they have to go and buy in the market the 30M shares ( this time non-restricted) to cover their short positon? Am I right in this interpretation?
----------
Thanks in advance to anyone that can help me to interpret today's agenda.
Please, help me to interpret Order?
It seems that all parties agreed in the wording of the NOL order:
Footnote 3
What I see here is that JPM and FDIC managed to get their names explicit and that we got the wording "provided however that the foregoing .. shall not excuse JPM from any restictions, requirements or procedures ... on regarding acquisitions .....""
http://www.kccllc.net/documents/0812229/0812229081117000000000013.pdf
Since this has been agreed by every party I guess the judge will get it endorsed and approved.
Any interpretation?
Doest it mean a serious rights restriction for WM Inc ( or an eventual buyer ) with regards to to NOL tax benefits?
Plain english.. about the best post..
Hahawin .. congratullations ...
this is one of the best posts I've read about WM Inc...
you put in right words an excellent summary of what for me is the gobal long term situation ..
I would add just to comments:
1.- The behaviour of the judge util now seems to reinforce in full your vision.
2.- In my opinion a buyout is still a possiblility. Why?
Depending on how the court events evlove and the risks perceived by JPM and FDCI in the diverse investigations (Cantwell Senator, litigation against JPM/FDCI by WM Inc and/or the federals) JPM could decide to offer a whole buyout for WMI in a not so long term.
We know about the precedent of Wachovia ..where a "forced hyper-bargain take over" was undone.
JPM was and is strategically interested in WB Bank and at this point I do not think they can dare affording a possible undoing of this deal.
Additonally a scandal about an eventual illegal behaviour by JPM and/or FDIC could be a disaster for JPM.
At any rate any of these two events - deal undoing and/or scandal - would cost JPM more $B in their stock value and prestige than the money invested ( not spent, but invested ) in taking over WM Inc.
If they perceive real risk about these topics.. they may decide to cover themselves with a buyout at fair price.
So the way I see it:
- long term ( months/years) value for common sharholder .. your argument prevails
- possible short term (weeks/months) ... a buyout from JPM is still possible.
Cheers, and again .. thanks for your clear mind !!
I fully agree Dragon ..!!
When Commons get wiped out?
.In a Ch11, once the valuations are clear as well as the debts and liabilities are clear
.... if the assets are lower than the debts, and there are not future incomes expected to pay the long term creditors .. then it's game over .. because in the restructuring the creditors will become the new owners of the new company ( new shares created, former commons are wiped out) ... so creditors don't get the cash back but at least get the ownership of the restructured company and eventually over time this returns value to them. ...
.... this is what happens in many cases .. the KMart expample may be one.
.... if the assets are higher than debts .. then the current shareholders have net value... then the restructuring is about renegotiating the cash flows with creditors so that short term payments can be attended with expected incomes....
then, the commons do not get wiped out at all. They stay as owners and only in case part of the mentioned cash flow renegotiation involves paying partially creditors with a share of ownership, then they may get dilluted...
Why I think so?
A)
This is the case of WMI. Me and many others poster have elaborated on these values these numbers many times in case of buyout or in case of long term restructuring... I will not repeat again
The current price of commonts is so so low, that set the market cap of this company in $100M, ... it's just a small fraction of it's subsidiaries and 4.4 cash value minus it's 8B debt ( remember that not all 8B debt is short term )...
Please review the hundred WMIs subsidiaries - operating, normally, not at all in BK. ... ot read other post with valuation scenarios..
B)
The judge attitude !!
For me this is key. Why?
This judge:
1.- Knows more about BK processes that we all together by far.
2.- By today has more information about the potential value the eventual exit of the BK, the position of JPM and FDCI, the possible lawsuits to come among the parties,... etc than we all together.
3.- Her role is to protect the ability of the debtor (WMI) to pay it's debtors and if possible came up with a viable company.
So she has experience and has data:
If she would perceive this case heading to end in liquidation here decisions would have been very different... normally focused in saving expenses and pointing out to speed up possible acutions of any assets to pay short terms debts until the eventual liquidation gets negotiated ....
... instead of that...
she accepted WMI to increase very significantly its recurring expenses hiring litigation attorneys, shareholder relationship advisors, transfering money to subsidiaries ..
.... in summary to keep the WMI operations moving and to keep WMI's potential to fight for it's rights at top potential .. even increasing recurring expenses..
Summary
Both A) and B) are for me signs that this BK case will not end in liquidation and will not end in Creditors getting paid with the company' ownership taking it our of the current common shareholders.
Examples of BK processes ending in commons wiped out? ... many
Does it make sense to invest in any BK pink stock?? Not.
Examples of BK processes ending in commons not wiped out but the other way around? .. not that many but some.
Does it make sense to invest in some BK pink stocks? Surely in some cases it makes sense and I do think this one is one worth very much at current prices.
You are right but even so ..
it's really the only reason I can figure out but ...
... I would wait until end December .. just in case .. wouldn't you ?
Uninvest $5 to reinvest it in bonds?
it's true that everything is possible but ... it sounds strange to me... .. hundreds of decisions like that these days ...
I think those with that sort of behaviour would have done so justs the days after the BK and out of despair .. they would not wait for a month to decide where to invest better $5 or even $100.
.. again it's a guess..
.. maybe you are right but ...!!
If court rejects Brandes's request ...
... then they will be forced to load aprox. 30M shares in the market ... am I right?
WaS your are my hero!! (*) I commit....
That:
If wamuq fly above $1 ..
+ I pay a tryp to Rivera Maya to WaS ... because you deserve it.
+ I pay a glass ball to Petrit because you need it to improve your omens
If wamuq dives and we get wiped out...
+ I pay a lunch in Burger King to WaS .. because you still deserve something .. ( sorry I would not be able afford more)
+ I do not pay a glass ball to Petrit because you surely already have it.
... the last think to lose is humor..
(*) I had problems with the audio of my computer and I could not hear WaS's great video until this morning ..
Sorry it was 0.058>$17.4k
$174k is what I'll make out of it.
unconcious mistake !!!
I filled 300k shares more at 0.58
I recognize that for some minutes I did not know either to sell or to buy .. I went away from my computer and came back decided to buy .. and I did it.
I cannot talk about others but although it's tough and scary to hold with this manipulation and keep cool ... I decided to keep using my brain with the information I have and not let the fear and the pressure in my guts to take control.
... I hope I did rigth thing...
... the judge behaviour, the data available about assets and debts, that the current capitalization is ridiculous compared to the subsidiaries and other remaing assets, the fact that the big stakeholders of this stock are loaded of commons and will not give up so easily ... ...
... many signs that the upside is great while the only sign of weakness is the pps behaviour ... that can be manipulated with small amout of money (9M shares traded are just $0.5M .. peanuts for MMs )
... and I can and I will wait...
... it's
It will not be delisted from OTC, you will be able to trade as today until:
- a halt happens due to a buyout,
- a restructiring process defines as a best solution one that involves th change these shares for new ones at a given exchange ratio - that would take months/years to develop and there would be many informations/communications flowing until that happens.