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Agree w DPincus and Catz
Been there done that on predictions, especially those with two commas in the "we get number" and with any reference to "the real settlement or mediation."
Plus, there is an intriguing DUAL TRACK going on here and on other boards; LTI's will be coming into BIG MONEY and then the LTI holders will be using their windfall to buy WMIH. The other board has a couple of noted LAW theorists with, in hindsight, have pretty much zero reliance. Interesting.
Let's see on the 20th as first promised. Then change to after the 20th when learned it was a Sunday. Remember, MLK Day is the 21st, so a play can't be that day either. Guess that leaves the 22nd for the LTI windfall to be converted to more investment in WMIH under this PLAN.
The ownership change provisions apply beginning on the effective date; the previous ownership change. That is why the Articles and By-Law and SEC filings address the NOL P Pill regarding 5% holders. If it was not applicable until after 12/31/2012, then they wouldn't have done it. That is all under IRC 382.
There is, if all of the professionals who put this together are all wrong, still IRC 269. That is when some transaction is based on "tax avoidance." Tax avoidance is a tough term, but it includes "making a transaction for the purpose of only the tax benefit." There is no apparent justification for acquiring WMIH for more than the cash value plus some NOL value expected to be monetized; especially one that intends to acquire WMIH in 2012 and use WMIH OL to offset that acquirers 2012 income. It just doesn't pass the smell taste.
I guess we leave it to time. If, by December 31, 2012, some large corporation with huge billion dollar income doesn't buy WMIH with the business purpose of acquring WMIH for a reason "other than the NOLs it has" and valued based on those "other than the NOL assets," then we get to move beyond this current dreamscape and settle in on the issues on a go-forward basis.
GLTY
The NOL is $6B.
Your Q "do you think the 8,37 Billion deduction are a net tax advantage? Are the 5,96 Billion (NOL carry forward ) another (and different) tax advantage we have to add to the 8,37 Billion (NOL for the current year)? Is the net tax advantage from the 5,96 Billion (5,96 * 0,35) 2,086 Billion? Is our total net tax advantage 8,37 Billion + 2,086 Billion, this is 10,456 Billion?"
The $8.7B, after proration, becomes the $5.96B.
It is valued at $-0- currently.
There can be no "ownership change" in the immediate two years, or it becomes $-0- forever.
There can be no "ownership change" in the immediate three years, or it becomes subject to the annual limitation of the value of WMIHC time the federal rate; about $5M per year currently; about a complete loss of the $6B.
So, there will be no "merger to get 35% of $6B." Why? Because that would be an "ownership change in the the 2 and/or 3 year window." The NOLs would be zero.
The value of the $6B NOLs will not come from an aquistion of WMIHC, or they become $-0-; in 2 years, in 3 years or at any time thereafter if the merger adds to the existing (only known to the BOD) increases by 5% holders, including public groups.
Contrary to unicorns Catz refers to (except the recent find of the Koreans), these expectations of acquisition for the tax value of the NOLs simply cannot be done under current laws and regulations.
* Asterisk, a tax law change or regulatory Notice {like 2008-83 that gave WB/ Wells the tax deal on Wachovia}, could still be in play by the club. That would be as close at it could get to being a unicorn for real.
Other than than, it is organic, internal; unless the HFs decide they have enough % to use DEBT from themselves to get the ball rollings. They measure that return, at the tax savings rate, less the out participation of non-HF retailers. Still early.
Only HOPE remains.... FAITH and TRUST appear to now have been eliminated.
HOPE is not a very prudent investment strategy.
Re: HOPE, it is continuing to be exercised even after noticing the responses to the comments by a former EC member have finally evidenced that the dreamers no longer have any basis for FAITH or TRUST that there are large settlements ahead or secret mediation deals [that the EC and SG were hiding as so many have ranted].
The HOPE, which is only one's belief, now has a foundation based upon WHAT THE FORMER EC MEMBER "DID NOT SAY?"
Wow. That is a very large universe considering what appears to be a small paragraph containing a few sentences. Do we now begin the new hope-based theories based on there viability in that they were "not not said" by the former EC member?
The statements he made are pretty clear. First, there will be no "large future payments from other parties," only what was "specifically referenced in the PLAN," with regard to the LT and FDIC/JPM. This is not rocket science. It is was it is. It always has been.
Re: Other Parties Outside of the Plan, and the reference that they are viable targets if our team can prove this in a court room, consider that FAITH and TRUST regarding have already been compromised by the responses to the EC member statement.
So, WHO is the new person or persons that people are now placing FAITH and TRUST in to "get these parties outside of the Plan?"
B.R. and WGM? Nope, they are representing the LT regarding continuation of debtor representation passed to the LT. Plus, why would one now confer FAITH and TRUST in him/them?
SG? To say that "they" are representing the LT is slightly inaccurate; E.S. alone is primarily representing the LT L Subcommittee on these potential settlements on "unfiled actions" agains "parties with no names." BTW, as per many posts, SG is not in good light of many for the performance in BK court. Some even have a real disappointment in the insider trading settlement when it was viewed that the SNHs were "cornered." So NOW, SG, or E.S. primarily alone, is going to "bring the big one home?"
There are no secrets.
There are WMI LT interests and retail shareholders have representation.
There are WMIH ownership shares in a the WMIH entity, which has $70M +- cash, NO exposure on the $130M runoff notes, $6B in unrestricted NOLs for 20-years.
Wells Fargo will benefit from the 2008-83 exemption from NOL limitations from an "ownership change." Warren B. doesn't do deals without every i dotted and t crossed. It was effective essentially for Wells re: Wachovia; big time club connections. That article referenced indicates that Wells couldn't use the Wachovia NOLs "that year" because they didn't have net income to offset it. Like WMIH, there are 19 more years to go when the 382 ownership change exemption is in place [for us, abandonment, for Well, political ties]. The 2009 Recovery Act did void "anymore such exemptions," but let those [Warren B and Wells] who "acted on Treasury regulations at the time" KEEP THE NOL EXEMPTION. They are good for 20-years.
Extract from the Recovery Act:
The KOD - Annual Meeting
That is the "last" thing any retail shareholder should hope for. In 15 months, if the BOD doesn't get a ball rolling, the concern should be that they have capitulated to the SNH and other HFs. The first sign would be setting the date for a shareholders meeting. Another sign would be the formation of a committee to consider a reverse split. Both lead to the same end. Retail shareholders under the split will get a net cash out of fractional shares. The consideration will be methodically based on cumulative case precendent; currently at 35% or so over "some moving PPS average over a base time period." The WMIH BOD, rolling in 1st quarter of management losses, retaining Blackstone, does not appear strong, does not appear to have TPS HF support for a preferred issuance of equivalent market value to the existing commons in order to raise capital and thwart SNH and other HF control actions. This entity appears to have a major challenge from avoiding going dark and private. There is no shareholder challenge to the action, only to valuation of the fractional shares cashed out. You must be large, have no concern about time or liquidity of your money, and defiant. Unlike some Y posters who purport that the HFs will take a huge % of any future income as fees, that will not result in income at WMIH to use the NOLs. To wit, that is a flat iron. There will be less liquidity then and forever than now if you somehow can sustain the reverse ratio. It is no longer a play. It is a long term act of individualism, retail, versus the club. Any other way doesn't work. Only a BOD arranged partner, in an aquisition combined with a preferred issuance to fund such, would change this course clarity.
Have you considered that in between "mid term" and "2-year long term" that there is something called the annual meeting requirements no later than 15 months? That would be what is called the 3/12/2010 of post bankruptcy; when the equity BOD could be bounced by easy proxy, or they recommend to you to take a deal they made for 50% over current book. If bounced, they have 9 months to "clean the table." No uninvited guests. No to SEC compliance. Yes to going private. Reverse split the retail holders out. Compensation to be simple math. MKT value or cash / shares. The only obstacle is whether TPS groups and DIME-ers can pony up for preferred stock to block; but they can be bought also. It is one big club. If you don't get an invitation, you are not going to participate. BB on YB was on the spot - "if" they let us participate. What do you think they will do?
For the heck of it, just what DS [Disclosure Statement] are you referencing that indicates WMIH is worth $1.4B, excluding the NOL valuation?
If you are referencing the Disclosure Statement for the Confirmed 7th Amended Plan of WMI and WMII in the Delaware bankruptcy case 08-12229, where may I ask do you see anything that indicates WMIH is worth $1.4B.
Thanks.
Yes, that is exactly what he said. It is in the transcripts, it is in the settlement agreement, it is the disclosure statement and the confirmed Plan, as well as the news release. It is appropriate for counsel to state the facts of "what is the deal," and they are not responsible for stating everything that "is not included."
We have heard recently of everthing in the 8K confirming the above, but against the grain of those who thought we would be merged, tendered, cashed out while in exchange.
I have no idea what was in the deleted post so I don't know what you refer to re: me choking.
SG is not our counsel anymore, they don't represent WMIH.
The FDIC is not contributing anything to WMIH or to the LT.
We have not just found out what is fair and more than reasonable, we have known for almost a year since the structure of deal one was announced. This is the deal, $75M cash, the short term credit facility of $125M with specific terms and conditions, and NOLs in an amount that has yet to be disclosed and will likely be disclosed in the 8K amendment for the audited balance sheet. The NOLs will likely be referred to in the notes, not as an asset, and there will likely be the same risk warnings about the likelihood of being able to utilized or value them.
"I have had my suspicions, but I highly doubt EC and ES/SG would blatantly lie to us saying that we got a more than fair deal, then proceed to screw us out of the majority of our already dwindling value."
The EC and, more precisely, SG said that it was "fair and more than reasonable." Do you believe them?
If no, well.
If yes, read on.
The EC and, more precisely, SG said that "we have a company with $75M in cash, a $125 credit facility and some valuable potential tax attributes."
If you believed them in the first statement, why do you doubt them in the second statement?
You cannot have it both ways. You cannot pick and choose what EC/SG statements that you want to believe and "ignore" the other statements that they make.
They also make them in court documents in Delaware, in SEC 8-K filings, etc. and you want to pick the ones that you like.
The actual settlement terms are disclosed in the court documents and they are clear. The disclosure of the assets, liabilities and equity of the reorganized debtor, WMIH, are clear. What is unclear is the valuation of the NOLs under GAAP versus bankruptcy, and the disclosure of the gross NOL via either abandonment or continuing equity ownership. That information has not been disclosed. Both are significant and material. The statements by WMIH in the 8K SEC filing are clear.
The continued rants re: matters that are no longer related to WMIH are troublesome that purport that some deal is hidden in the blue sky rainbow and that there is some pot of gold that is a secret. The inference that MW, SG, the debtor et al, or any party has "hid" anything is absurd. It would invoke incredible exposure for falsification of bankruptcy Plan and Disclosure Statements, Settlement Agreements [Equity, DIME and TPS] and even WMIH SEC filings.
WMIH is what it is. No more. It is quite interesting and valuable. The net $75M cash is all that will show as net equity on the 8K when amended. The NOLs, as big and valuable and durable as they are, will not be valued at the outset. That asset, the tax attribute aka deferred tax asset, could over time be very large. It will take time.
Is it worth it? IMO, yes. But, you must have the time. And there must be no overt action by the dominant hedge funds to take actions to freeze out minority retail shareholders. If that happens, we will be back at the point we were at when the EC was formed.
We wait and see. It would be nice to refrain from the billions and billions of rainbow gold pot posts in the meantime. But, the pumpers are and have been as wrong as the bashers. There is a real value in the NOLs and that is the next front.
Bluzie2, I learned so much from your work when first stepped here. Many thanks. To start, I was so hedged with DIME in November that I settled just a digit under 0.8 as it met a level beyond my expectations as a WMI P hedge. I'm glad for those who continue to ride, but more sincere for those who were here before all of us, the "ancients."
The LTW PPS this week, and this month, has been interesting. Someday, after trader inquiries are concluded, we will know who has been buying and who they knew. To me, the volume and PPS indicates a potential settlement versus an outright win; which you correctly note will take winning in the adversarial, winning in the debtor appeal and winning "what" by calculations; likely, the contract terms "as if." Not easy stuff.
So, if settlement is driving the PPS and volume, it just feels like it is because A. Steinberg is making a settlement. Since retailers "can't know" [we need to fix that down the road] to me it appears that there are insiders who are quite happy with a 1.50 or 2.0 to one in a short time period. And, on the sell side, the HF's know WGM and Rosen and things can change in a blink; so shares are sold.
You are so right that this hasn't been heard, decided, or appealed by the down side party. Years and years. And, as a wild card, the US DOJ just happens to also own the US FDIC-R and C litigation standing.
Good luck to all original DIMES {thanks for the messages, and if I get to NY we will see a show and dine}, the next line, and the WMI classes that looked for a hedge. Everyone is on their own. It really is a decision of the bird in the hand ....
Again, many thanks to you and a your iHub group of DIME posts. You provided so much in so little time and did what I needed to do.
GLTY&A
JMW and the TPS Opinion
TWACOWFCA
I refer to the JMW has not favorably on such matters, ask TPS with a wide but broad brush as TPS and DIME LTW are not the same, but they have some matters in common.
TPS Summary Judgment
http://www.kccllc.net/documents/0812229/0812229110110000000000008.pdf
They each have a trigger which became a source of argument. With TPS, where the underlying mortgage portfolio interests were severed and replace by WMI with theoretical preferred stock and an immediate transfer to WMB of the TPS; according to JMW. All as it related to the identification of the trigger events and with no consideration to the "actual events" in that the conditional exchange was to be a factor to protect the TPS and to bolster WMBs capital.
To what end. If the bank subsidiary has been seized, what benefit is the capital contribution? In the recent Colonial bank bankruptcy, where the FDIC bases its claim on the parent holding company cash, tax refunds, etc. for failure to maintain sufficient capital, the Judge ruled {I believe in August} that it makes no sense to hold the parent of a bank subsidiary under an obligation to maintain capital if the FDIC-R has already taken the bank.
So, IMO, JMW really ignored the actual events and focused soley on the trigger and the resulting conversion to preferred equity.
They each have a result. Re: DIME LTW, it would be a concern for the last part first, that the resulting conversion is to common equity. She did not rule SJ for the debtor, but I believe it was more on the debtor clear errors and missteps and tactics than her assessment on the merits {not mine, but hers}. So JMW will allow the adversary to continue and she will examine the trigger and appropriate result of the trigger.
The fact that she let JPM take ownership of the award is puzzling. She separated the asset from the imbedded obligation; as she did with TPS. To a reasonable person, the trigger hasn't taken place yet, the final award.
So will JMW look at the WMI BOD as responsible for not protecting the LTWs and allow it based upon that claim. Maybe, it would allow her to correct her mistake on letting JPM have the related assets unencumbered. Hopefully, there won't be much "may" or "shall."
I don't know if this helps. Each issue is tough, the TPS is $4B at face but most at or after the petition date. The DIME LTW is much less and as some have posted, longer and closer holding.
I don't know what will happen, but the Judges logic on the TPS is just a concern.
Again, just IMO.
Really good post jmbell42
You core that you reference were invaluable when hiding for cover this fall. I wish I had known more about the LTWs prior to November, but until I had time to study the award and litigation status {most of the information was found right in this thread, or links from this} I waited and really only used it as a hedge.
My wet face cloth is just from having the debtor, JPM, FDIC and the four horsemen wreak havoc in the WMI bankruptcy. These are not your average adversarial parties, individually, never mind in unison and with locked arms. I've seen so many get really burnt trying to make up for the past and get deeper, or not get some fractional coverage in safety. So, I wanted to make sure those that read here but rarely post know how nasty the WMI bankruptcy has been and continues to be.
When I first started researching the LTWs my position was that the followed the litigation award which was not final. I was surprised that JMW allowed the litigation award to be part of the GSA and be an asset sold to JPM.
I emailed DIMEQ counsel about JPMs financial statements and acquisition accounting, as per the US DOJ filings, that JPM allocated nothing in the acquisition to the Anchor litigation and wanted the 2-year back date to merely cure the defect raised by the US DOJ and also asign basis to the litigation asset and when settled pay no taxes, or less. I offered to counsel an alternate treatment at WMI, with NOLs currently and carried forward, that the tax impact would likely be zero. I don't know if any communications were needed, but I will say when A.S. writes or speaks, WMI holders listen. He has been really a breath of fresh air.
I truly hope that the long DIMES get what you deserve, retailers and even others. I can't imagine having waited so long, then got the adrenaline rush of the first award pre-BK, then the gut blow of the WMI BK and the vacuum, then the theatrics of the WMI BK. You all deserve what is right.
Small water: this debtor and coalition hasn't had a glove put on them yet.
GLTY&A
LTW Market Priced or BK Priced
This forum has some really good posts and information that allowed me to get up to speed really quick in November as a DIMEQ hedge against the WMI Ps. Thanks to all.
Currently, there some comments. IANAL, but have really followed this case closely.
First, there is question now if the LTW PPS has moved from where it was to where it is after the summary judgment was denied, and after the "reserve" was established, and the POR confirmation was denied is (1) because of the underlying value of the litigation award and the probability of success as debt, or (2) as a potential new fulcrum point in the waterfall that may get cash and or a piece of NEWCO.
Under (2), there is also a theory that it might be less than an honest investment; that the hedge funds would spend what is being spent to be able control the likely vote of the DIMEQ as part of Class 12 as they didn't get a chance to vote.
No one really knows other than the players.
Second, re: the US Court of Federal Claims, although it appears irrelevant, the ownership of the Anchor litigation may very well be the FDIC-R and the US DOJ motion precludes the FDIC-R from using it in the GSA to settle with anyone, including JPM. That will make JPM and FDIC-R not happy, and if the BK is not confirmed, it becomes a wild card.
Third, the $340M+ "reserve" is too attractive to the out of the money parties. For example, as the EC argued that the WAHU's were "equity not debt" and the Judge left that open, it would not be out of the range of likelihood that the EC would take a similar position with the DIME LTW. They would especially consider this if the debtor and DIME proposed a settlement.
I don't mean to throw a wet blanket, rather a wet face cloth.
This is a nasty bankruptcy and one has to risk assess as to if this will I make 2-1 for this risk and is it worth it considering the above comments. For those that hold a lot and for a long time, one might consider some profit-taking to cover the downside risk and not be so overweight. Also, although the reserve is almost $3/LTW or 3-1, one should also closely assess the risk of JMW issuing a split decision; debt but no pass through of the tax gross up; the original LTW is pretty clear on the tax application {regardless of actual rate} and 15% administrative and legal fees.
GLTA
Caution - This is WMI BK
I haven't posted in a while, and I have liquidated a large number of shares at almost $0.80, but I was and am concerned that the variables of the WMI BK will spill over to the DIMEQ.
DIMEQ's counsel is the best.
DIMEQ's LTW appears solid.
DIMEQ's are part of WMI's bankruptcy. Caution flag for me based upon pavlovian experience with the debtor, the debtor coaltion of the FDIC, JPM and the WMI noteholders and JMW.
I've always believed DIMEQ was the best hedge for WMI equities. It was. But, I was and am concerned that the DIMEQ "reserve" is an attractive prize for the debtor coalition should it choose to free up $300M+ for "other settlement matters."
JMW will make a determination of whether DIME LTW is a contract liability of WMI as a trigger event; and if such result is either a dollar claim or an equity claim.
JMW has not ruled favorably on such matters; ask TPS.
Also, the US Court of Federal Appeals continues as the US DOJ continues to claim that JPM is not the successor to WMB and is not the owner. That's a tough opponent. That dampens the "we'll get JPM shares" quite a bit.
It has been a great run from the upper 20's to today. There really should be caution as in this BK the WMI Ps once priced well over $100 only to be brought back to earth.
Just IMO. I continue to believe that the DIMEQ are directly tied to the award; but I don't trust this BK, the debtor, the coalition or JMW.
GLTA.
Courtesy of GHOST - Documents
The following are the most important documents since August. The FEDS are taking JPM to task as not the legitimate owner. I won't influence anyone's thoughts; there is a lot to read. This, to me, explains the PPS more than JMW POR Denial on the same date.
Again, thanks to GHOST for accessing and hosting these documents.
Lawrence J. Block
Judge Case 1:95-cv-00039-LB Document 343 Filed 01/07/11 Page 1 of 1
http://ghostofwamu.com/documents/95-00039/95-00039-0343.pdf
Plaintiff’s surreply (Dkt #339-1), and
http://ghostofwamu.com/documents/95-00039/95-00039-0339.pdf
Defendant’s response to Plaintiff’s sur-reply (Dkt #340).
http://ghostofwamu.com/documents/95-00039/95-00039-0340.pdf
Defendant’s Motion to Dismiss, filed August 2, 2010 (Dkt #329),
http://ghostofwamu.com/documents/95-00039/95-00039-0329.pdf
followed by Plaintiff’s opposition (Dkt #335),
http://ghostofwamu.com/documents/95-00039/95-00039-0335.pdf
Defendant’s reply (Dkt #337),
http://ghostofwamu.com/documents/95-00039/95-00039-0337.pdf
Be Cautious At All Times
With this debtor.
Your statement:
"A (relatively) quiet day for DIMEQ. Lots of trading, a jump in price, not as much as I was expecting, though. Based upon the hearings I've listened to, I think DIMEQ is hammering Wamu. Hard. With the POR being rejected and DIMEQ poised to resume discovery, if I were Wamu (or, as Jared likes to note, JPM), I'd be looking to come to terms with DIMEQ in an attempt to move the POR forward."
IMO
JPM is already out of this. I believe the Judge allowed the debtor to transfer the Anchor litigation as part of the GSA.
The $300M reserve in the POR for the DIMEQ is appealing. I believe that it is a little high, but Steinberg knows what he is doing asking for it without tax effect since it is from the Debtor and not from JPM. HOWEVER, the risk is still there for JMW to rule "the most these LTWs could ever be was equity." I would, as mentioned below, get out of this whole POR involvment due to the WaMu risk. DIMEQ is not a vested party with the debtor or equity; so DIMEQ's reserve is a dividable money pool consideration by and of both.
So, there is risk. And the risk is magnified because the DIMEQ $300M reserve and become immediately available to the estate if the Judge rules along those lines. I hope not. I am invested not. But, I have seen too much not to consider the possibility.
And DIMEQ is now in play. Today's short:
http://regsho.finra.org/FORFshvol20110110.txt
20110110|DIMEQ|1271557|4203202|O – 30%
We haven't seen this in DIMEQ as a normality. So, it just raises an eyebrow. Yes, that is 1.27M shares shorted!
I'd be pleased if Steinberg settled at about $2.0-$2.5 and get out of the whole POR undecided matters rather than allow the Judge to be involved with this at all. She adds that 50/50 factor that, applied to $3 is $3 or $0. Bird in the hand I guess. And as we have followed this case, 50/50 so far hasn't been as advertised.
GLTY and All
Short Report for 1/7/11
http://regsho.finra.org/FORFshvol20110107.txt
20110107|DIMEQ|506156|1326158|O
It appears that parties inside had access to the decisions of the Judge prior to the GP. DIMEQ does not have a history of the shorting.
So, one of two is likely.
The shorters believe the Judges ruling is bad.
The shorters are wrong.
Who knows? Shorting DIMEQ is not the same as shorting WAMPQ. It is very tightly held.
The shorts on 1/7/11 were at some decent PPS. They are hoping for some capitulation of some sort on Monday. It won't come from the DIMEQ longs or the WAMPQ DIMEQ hedges.
Could be interesting.
Steinberg has been excellent.
Agreed. DIMEQ was the only hedge left. It appears JMW is going to rule on "all matters" tomorrow. The boards are buzzing. Ilenes reports that the attorneys in the room believe she meant "all matters." That would mean the POR.
It appears DIMEQ is in a good spot at the moment. The highest possible reserve was ruled on from the bench. Next up, who owns the litigation, JPM or the estate? Personally, I've always noticed JMW's loathing of JPM's arrogance. Early comments from her when JPM has tried to tell her what to do have not been received well.
If she keeps the litigation asset with the estate, DIMEQ wins and the estate wins. The estate has a 0% effective income tax rate, plus the 15% administrative allowance. JPM also then has to decide if they pull out of the GSA. Likely depends on if the rest got approved.
If she lets the litigation asset go to JPM and the reserve and liability remain with the estate, DIMEQ still wins but the estate loses.
So, in summary, DIMEQ does appear to be the hedge for whatever happens tomorrow and a reward for the historic DIMEQ's who should never been put in this mess by JPM over a bitter 15 year old wound.
The DIMEQ is the only WMI Stock Hedge
There is a reason that many retail and hedge funds have invested in DIMEQ as a hedge to the WMI preferred and commons. First, the fundamentals, the LTW trigger event has not happened yet and the market has priced it at about 4 or 5 to 1 currently. Second, what is good or bad for WMI preferreds and commons might be viewed as good only for DIMEQ.
For example, if WMI preferred and commons are lost, then the POR has been in substance approved. When JMW gets to the DIMEQ litigation, what would one assume her balance of judicial attitude would be? Also, if WMI preferred and commons are lost, what would one assume the debtor, FDIC and JPM balance of risk reward would be overall. Of note, the debtor has already reserved hundreds of millions of dollars for the DIMEQ.
Continued, if WMI preferred and commons are not lost, and the POR is defeated in a meaningful way {such as tax refunds, NOL valuation and especially litigation valuation non-existence}, then DIMEQ conversion becomes {hold your seat} the "controlling" party of the WMI commons. Do the math, 30-day average conversion.
In sum, DIMEQ is the hedge left for WMI preferred and commons and the market knows it.
GLT all the long DIMEQ holders, especially those who have filed such brilliant, honest and gut wrenching objections. You should never have been dragged into this mess, but it is not about WMI. It is about DIME. It is being punished for selling to WaMu, and for WaMu waltzing down NY's club with splash. The NY financial club is teaching a lesson to others to not do what DIME did.
I think you'll win in the end, one way or the other.
DIME counsel called out Charlotte's expertise into question in her reference to the DIME LTWs acted similarly to WAMU Commons.
Well, if that is true, DIME counsel points out WAMU Commons versus DIMEZ at 9/26/08 and where they were as of 11/30/10. Case closed? See the visual. He's right.
Does anyone have the post WMI-DIME acquisition historical LTW price comparison of the DIMEZ to WAMU Common through 9/24/08; I'm remote now and don't have good access? Or a link to where I can get it. I'd like to forward it to certain counsel ASAP.
Nice.
Not only nice, but very well articulated and actually quite impressive. It you want market pricing to be a factor {the expert witness that is} well fine.
Really good. Thanks.
DIMEQ class counsel group have this and quite a bit more. Quite sure.
DIMEQ class counsel are, individually or collectively, more than a good match for Rosen on the specific Anchor litigation and the LTWs. I wish they would push for WMI ownership versus JPM so that the almost $300M+++ windfall above the DIME LTW settlement would "flow through the debtor tax free" to touch the WaMu preferreds. But, that is another matter.
Current mere googles of Jefferies with JPMC and WGM during her time at Jefferies will give transaction, relationship or other hits; not unexpected for such large entities. Paths were likely crossed at one point to make an awareness of each other.
It appears her position at Jefferies was eliminated as reported in www.wallstreetletter.com October 2005 {page 3 of the pdf}.
She also appeared at one point to be positive on WaMu on Fleet and WaMu's merger momentum.
http://www.allbusiness.com/finance/806128-1.html
"[Is Washington Mutual moving too far, too fast with its acquisition spree? Certainly not, according to Chamberlain. "If there's a moniker for WaMu, it's 'Mergers R Us.' They must have done 30 of these things in the last 12 years. They've basically been there, done that. Absent acquiring Citicorp, I just don't see the current challenge is beyond them," Chamberlain says. "Once you've done that many, it would take a lot to derail their forward momentum at this point."]"
I'm not sure if it is needed, but this type of prediction might also be considered by DIMEQ counsel, if you know what I mean.
Good luck for tomorrow and the days ahead.
It seems Charlotte has a different view about the value of warrants as an industry expert in 1998?
INVESTING; How to Win Big in Court And Never See a Lawyer
1998 NYT Article
By PAUL SWEENEY
Published: November 01, 1998
EVER wish you could get a piece of a major lawsuit? You can, in the form of some wildly esoteric securities that track the outcome of three billion-dollar suits.
Moreover, an award is expected next spring from the United States Court of Claims in Washington in one of the suits, which was filed against the Federal Government by the Golden State Bancorp, a savings and loan. So some analysts are rating the suit's related security -- generically known as a litigation participation certificate -- as a buy.
Such certificates, listed by Nasdaq, grew from the savings-and-loan crisis of the 1980's, when the Federal Home Loan Bank Board was encouraging healthy savings and loans to buy ailing ones. The board created an accounting device that allowed the buyer to list the liabilities of the acquired institution as ''supervisory goodwill.'' This could be written off over 35 to 40 years, and during that time, the write-off would be accounted for as capital, against which loans could be made.
In 1989, however, Congress dissolved the bank board and phased out the supervisory goodwill. The savings institutions contended that this move violated their agreements with the Government.
More than 120 breach of contract suits have been filed against the Government by savings institutions seeking restitution and damages. The lawsuits could ultimately cost taxpayers $30 billion.
Because pending suits were likely to complicate mergers in the rapidly consolidating savings-and-loan industry, three institutions -- Golden State, California Federal Bank and Coast Federal, created special securities to spin off the potential value of their suits to shareholders.
Coast Federal has been acquired by Washington Mutual; California Federal is acquiring Golden State but is keeping the latter's name. The three institutions have all received summary judgments in their favor at trial court level. They are the only thrifts to have spun off such securities, which trade separately.
**********
Charlotte Chamberlain, an analyst at Jeffries & Company, said the Golden State certificates are the blue chips of the group because an award is so close, though the Government is likely to appeal any damages.
Golden State, which calls its certificates litigation tracking warrants, is the only company that will pay off in stock, making the payout nontaxable until the shares are sold. The warrants closed at $4.875 on Friday. Ms. Chamberlain says they could pay off at $11 each if Golden State gets the full $1.9 billion it seeks.
**********
I am very confident that the contingent asset {settlement of litigation} is inseparable from the generating contingent sharing agreement, the LTW's. With all of the other matters in WaMu, this one is market priced at about 1 in 5. Considering the WMI P preferreds are 10 in a 1,000 {1 in 100}, and the power of the debtor, the DIMEs look as good as ever, especially if WaMu flavor don't fair well and the good Judge can allow a sweep. Just IMO. The LTW's seem so black and white it scares me that concern about the US Judicial system would cause the market to peg it even at 1 in 5. We'll see. A couple of the LTW individual shareholder objections and related documents were more persuasive than Rosens likely $100,000+ self-interested pontification.
FYI - Notice of Subpoena - Jacquelyn Hart
Docket 0077 11/11/10
{sorry, no link}
BROADBILL INVESTMENT CORP.,
NANTAHALA CAPITAL PARTNERS, LP,
AND BLACKWELL CAPITAL PARTNERS,
LLC,
Plaintiff,
v.
WASHINGTON MUTUAL, INC.,
Defendant.
NOTICE OF SUBPOENA
PLEASE TAKE NOTICE that in accordance with Rules 7030 and 9016 of the Federal
Rules of Bankruptcy Procedure, and pursuant to the attached Subpoena in an Adversary
Procceding, Plaintiffs Nantahala Capital Partners, LP, and Blackwell Capital Partners, LLC,
through their undersigned counsel, hereby give notice that they will take the deposition upon oral
examination of non-party witness Jacquelyn Hart. The deposition will take place on December
20, 2010 at 9:00 a.m., or at such other time mutually agreeable to counsel and Ms. Hart, at the
office of Rosner Law Group LLC, 1000 N. West Street, Suite 1200, Wilmington, Delaware
19801, before a notary public or other person authorized to administer oaths. The examination
may be recorded by stenographic and videograhic means and will be continued from day to day
at the same time and place until completed.
PLEASE TAKE FURTHER NOTICE that the annexed subpoena demands that Jacquelyn
Hart produce documents for inspection and copying on December 8, 2010 at 9:00 a.m., or at such
other time as is agreed upon by undersigned counsel and Ms. Hart, at the office of Rosner Law
Group LLC, 1000 N. West Street, Suite 1200, Wilmington, Delaware 19801.
YOU ARE INVITED to attend and cross-examine.
Dated: November 11, 2010
New York, New York
__/s/ Frederick B. Rosner______________
ROSNER LAW GROUP LLC
Frederick B. Rosner
1000 N. West Street; Suite 1200
Wilmington, DE 19801
Telephone: 302-777-1111
KING & SPALDING
Arthur Steinberg
1185 Avenue of the Americas
New York, NY 10036
Telephone: 212-556-2100
Facsimile: 212-556-2222
SCHINDLER COHEN & HOCHMAN LLP
Jonathan L. Hochman
Daniel E. Shaw
100 Wall Street, 15th Floor
New York, NY 10005
Telephone: 212-277-6300
Facsimile: 212-277-6333
Counsel for Nantahala Capital Partners, LP
and Blackwell Capital Partners, LLC
---------------------------------
Who is Jacquelyn Hart? I believe the SUBPOENA was for her time in capacity as per the underlined below while with the NY Banking Department.
Jacquelyn A. Hart Joins Stevens & Lee's Corporate, Finance and Capital Markets Department and Financial Institutions Group
http://www.stevenslee.com/news/2010/JHA_Joins_Stevenslee_092110.htm
READING, PA, September 21, 2010 – Stevens & Lee announced today that Jacquelyn A. Hart has joined the firm’s Corporate, Finance and Capital Markets Department and Financial Institutions Group as Of Counsel.
Ms. Hart focuses her practice on corporate and securities matters, including corporate governance, compliance and regulatory matters for publicly traded companies, including financial institutions.
Prior to joining Stevens & Lee, Ms. Hart was a senior corporate attorney in a large law firm based in New York City. She also served as vice president and corporate and securities counsel for two metropolitan New York financial institutions, where she was responsible for major corporate transactions, including public and private offerings of securities, Sarbanes-Oxley compliance and oversight of 1934 Act reporting and mergers and acquisitions involving the institutions as both acquiror and acquiree. Ms. Hart has also served as capital markets associate counsel for the New York State Banking Department, where she provided advice on a variety of legal issues affecting New York state financial institutions.
R,
Rosen has rolled along in the WMI BK without a glove touching him. He is confident he has the EC, TPS and WMB under water, he's looking for the next timecard and the next tallest blade of grass. DIMEQ LTWs are on his radar. The PPS movement ahead of a Rosen filing is classic. Recently, the volume doesn't support the price drop; it only eats away at the holders when EOD portfolios are looked at.
Broadbill counsel is more inspired than even the TPS counsel, is not weighed down by the crippling limitations on EC counsel, and they hold the rights to monetary awards not included in the estate. They pay for themselves, and the estate gets a freebie. Only if the debtor keeps the Anchor litigation in the estate does the estate get a freebie {hundreds of millions}. In the estate, the receipt of the final award settlement would be revenue against current period losses, or used agains the estate NOL carryforward. The estate makes out pretty good.
Not so if JPM is gifted the LTW litigation award, and not the related obligation. JPM has taxable income @35%, plus state taxes, and really doesn't benefit unless the related LTW obligation is left behind with the estate.
Rosen actually is working our dime for JPM at this point, not the maximization of the value to the estate.
Rosen will next and simply try to do the same routine as with EC, TPS and WMB and get a chunk of the LTW, bill for the time to do it, tell the Judge how hard he has tried to get this worked out.
He is trumped by Broadbill's consolidated class representation who are much more familiar with the LTWs than Rosen could ever be. He will soon be much busier than even he expects, and he may want to revisit the LTWs with a full reserve in the liquidating trust for the formula based award to the holders.
And again, maintained through the estate, there are no federal {an likely very little NY} taxes. It's a win for the LTWs and for the estate.
GLTA
Jared:
Agree entirely with "don't think things have materially changed for us." After POR/DS6 revisions, these were a hedge for what a poor examiners report would do to the preferred and common colors. It appears to be holding true. Only 1% traded. I know that I have added again for the investment value versus the mere hedge protection value; and I know a number of others have done the same.
Yep.
If my worksheet stands up to those of you following this for longer than me, it looks like they want to know why it isn't at least $287M rather than the $191M {a difference of $96M}. The DS indicated it could be $63M more {I don't know if this reference is to added damages or interest*, however}, so counsel would like to see the caclulation of the reserve increased at least from $191M to $254.
*Regarding interest, there are published post judgement rates {for a long time tied to certain US Treasuries, then a bit of a change} for awards in Federal courts. I have that dowloaded in XL, however, I don't have a reference as to when the interest clock starts on that and if the the posted post judgment rates are the correct ones to apply. If anyone has input on that I can run it and see if it is related to the $63. My gut feeling is that the interest should be higher on the "grossed up" $547M since either the
(1) the period the claim arose - Per the 8-K 3/12/2003
"Our claims arose from Anchor Savings' acquisition between 1982 and 1985 of eight failing savings and loan institutions, the deposits of which were insured by the Federal Savings and Loan Insurance Corporation, a government agency that provided deposit insurance to savings and loans ("FSLIC"). Anchor acquired four institutions with some direct financial assistance from the FSLIC (collectively the "assisted mergers"), and acquired the other four institutions without direct financial assistance (collectively the "unassisted mergers")."
or
(2) when the lawsuit was filed - same ref.
"On January 13, 1995, Anchor Savings Bank FSB filed a lawsuit in the United States Court of Federal Claims captioned Anchor Savings Bank FSB v. United States, No. 95-39C, alleging breach of contract and taking of property without compensation by the government in contravention of the Fifth Amendment to the United States Constitution."
8-K
My worksheet is an attempt to make the calculations of the estimated LTW value on conversion or upon settlement. There is no indication that it is a settlement as I understand that it is part of the BK.
Disclosure Statement 6 @ 14(a)ii and (b) on p55 clearly note that the various adversary procedings have been consolidated and coverted into one Class Action on behalf of the LTWs. In DS 6, the debtor has indicated that upon success by Broadbill/LTW Class Action, the LTW's will be moved from Class 21 (behind preferreds and ahead of commons) to Class 12 and the liquidating trust shall reserve $194.1M as the maximum amount of the award entitled to the LTWs.
Again, my worksheet is for an understanding of the calculations for conversion or cash settlement. It is based only on the $356M and does not include the $63M (possible total of $419M) as also detailed in the DS.
I've made the correction for the 85% factor as pointed out previously. Thanks. Yep, it is just over the $2 expectation that others has referred to.
Ignore the MAX factor calculations as those were for my own benefit in estimating what the estate could save by transacting the award receipt through WMI and utilizing its NOLs.
Thanks for the replies.
I agree, I don't think that the $245 should be added to our award {I wish, it is a pipe dream}. I was using it as a high mark for analysis only. The $245 is what the LTW calls for at 46%+ tax rate, regardless of actual tax. I know that the we aren't pressing for it, but I used the WMI NOL as the high range in the grand scheme {really fits this BK} in that the Debtor and JPM have this amount to work with also. Settlement using the estate negates federal taxes, which allows money under a shell to go to JPM. JPM can simply adjust its acquisition recording, or possibly net against other money it may have to pony up.
The 85% - 15% matter is a good note. I'll revisit and see where I missed that and should make the appropriate adjustments. That might be why the floor calculation is just above what you've indicated has been discussed before. Thanks.
The dilution issue appears to be something that seems "way out there" that counsel might acually find a benefit in trying to use. There appears to be a legit award, held and bumped on appeal, and there has been no appeal to the SC {however time will toll and tell}. But there is fair question out there also. Could the owner (JPM or the debtor?) have been in a position to have settled already, but for some reason they have decided not to?
This whole BK is landmark.
Nice to know that there are others out there.
It appears that the Debtor has about $100M of variance from the lowest amount the DIMEQ LTWs believe that they are entitled to "prior to added damages and prior to interest."
I have a worksheet that is my attempt to first calculate the conversion feature {which would be a real poison pill if the Examiner brings commons into the money, staggering dilution}, then calculate the cash settlement.
I used a range approach, all taxes paid at 46%+ per the LTW agreement "regardless of actual rate" also as per the agreement; and no taxes paid. The purpose was to show the level that is available to the parties work it out.
I've never had anyone check the analysis so I'd be interested in any corrections that are noted.
What an awful way to make a first post, but here goes.
DIME counsel has indicated that there is no scheduled date at this time. I believe the uncertainty of inter-related WMI bankruptcy with the FDIC and JPM as parties has been a challenge to the normal scheduling procedures.
DIME counsel, when making comments at the recent BK hearing, have asked the court for the debtor to disclose to them the "calculation" of the amount the debtor has offered to move from class 21 to 12 if the litigation (not the BK, but the base Anchor) is sustained. Currently, the debtor offer is under $200M out of the $xM award.
The award was stated at $356M and was sent back to the lower court for (1)(gross up for tax effect), (2) additional damages, and (3) interest calculation. It can be estimated that the recovery is significant.
Complicating the settlement to DIMEQ LTW's is that JPM is moving as the purported owner, setting off a net of tax argument to reduce the payout to the DIMEQ LTW holder's {46+-% per the conversion agreement, not a non-conversion definition}.
DIME counsel will argue that the BK estate is the beneficial owner and, in light of the $B of NOLs, there is no federal tax at all. If the debtor and JPM work with DIME counsel, the LTW will pay out in a calculated range with the estate allocating JPM the tax difference "in another color."
Trying not to pump, but I have held DIMEs very early, and have added since the Appeals affirmation. It seems to me to be a better hedge against all colors of WMI than the Hs once were.
Thanks.