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The two other members on the EC can call an official vote and vote Willingham off the EC chair position. That's no big deal. They could also block his appointments to the newco BOD, litigation advisory position, etc.
They can't vote him off the committee though.
I recall a certain fool saying no settlement no way.
I happen to have ran across the tranquility opinion right after it came out. I had no idea what it was, but curiousity got the best of me and i gave it a look. I don't think it's on point here, so I didn't think it was worth getting everyone's hopes up.
http://www.kccllc.net/documents/0812229/0812229110718000000000007.pdf
Read that reply brief. It distinctly points out the difference between their claim and DIMEQ's claim.
Tranquility's claim is based on a security not issued by WMI or an affiliate.
The LTW's, on the other hand, were issued by DIME which was subsequently taken over by WMI as successor in interest. Furthermore, the LTW agreement had a proviso for a successor in interest. The agreement also has a proviso for a sale of the litigation. Therefore, the risk was assumed.
IMO, Tranquility's 510(b) defense is distinctly different than DIMEQ's.
If anything, JMW's decision on the Tranquility claim may enhance the debtor's subordination argument.
The plan provides discretion for a recovery amount less than 30% for commons and less than 70% for preferreds. You are voting for a recovery range, and granting releases, prior to that discretional determination. Just because you vote and release based upon the 30% does not mean you will get 30%.
AHHHHH, but there ARE strings. Read the fine print.
If it makes you feel any better, my guess is 60% Class 18, 40% Class 12, and zero % Class 21. But, if I'm wrong, and the conversion is correct, WAMUQ is up in smoke. My first guess was .005. The last numbers are those opined by DIME class counsel.
But regardless if Class 18 applies to DIME, the commons and preferreds are still subject to a two step death trap, which most don't understand, even though it is spelled out in the DS.
As I suggested, DIME in 21, if it happens, will mean DIME will ask for the anti-dilution treatment provided for in their contract. If it stands and DIME is in 21, WAMUQ's range of recovery is .0044-.0087 per share, or something along those lines.
I'm going to provide some bid support in the .015 range !
When it comes to disclosure statements, this one has got to be the most pathetic thing I've ever laid eyes on. PIERS are predicted @ 9% (74mil). First off, DIMEQ will end up dragging the court's opinion and order out a couple of months, most likely. I doubt their treatment in class 21 will go smoothly at confirmation (if it happens, which that is what the plan assumes). So in reality, you're looking at approximately 44 million/23 = $1.91 (subtracting 30mil for 2 months delay). BUT, as the disclosure statement said 'max 250'. Sure. What they are essentially saying is that about half of the claims in class 12 won't get anything, therefore that value will flow over to the piers and add to the 74 million. Really? The debtors missed the 'tranquility claim' that was just approved for vetting by the judge. That's another 49.6 million that stands in the way of the 'max 250'. Then you still have to account for DIME in class 12. DIME in class 12 is zero for piers, no ifs, not buts, and there's a good chance that may happen.
Even if you got the $1.91 or $3.22, you would have to wait until the claims were vetted to realize any additional payout that would add on to your recovery. That means another year or more waiting for a tip to find it's way to your mailbox. May happen, may not, but one thing is for sure and that is you won't be able to trade it upon confirmation.
Think of the '250 max aka $10.86' like this. The debtors don't disclose the probability of it happening, only the likelihood of 9% on a given date. Getting 250 is like saying you have a 50% chance of getting a date with the hottest woman you can think of, because it's 50% 'yes' and 50% 'no'. Now what is the actual probability?
Keep in mind that if the 'tranquility claim' had been approved by the judge prior to this last disclosure statement, class 12 may have had 49.6 million added to it and therefore putting the debtors estimation of piers recovery at $1.03, but only if confirmed by Feb 29. Two months delay = zero, again.
Appeals and Equitable Mootness:
No matter how right you are, and even if an appeal is not blocked by a plan, those two factors, in no way, assure success of being paid.
In other words, if you are sure you are due compensation, that doesn't mean you'll see a penny.
The judge 'fabricated' Doctrine of Equitable Mootness, loosely translated = 'I don't want to touch this because it may be a pain in the arse' doctrine, so 'I'll just dismiss it and won't hear it'.
Delaware resides in the 3rd Circuit. The 3rd circuit isn't appellant friendly when it comes to equitable mootness.
http://www.krcl.com/clientuploads/ABI%20Article%20Equitable%20Mootness%20Will%20the%20Surgery%20Kill%20the%20Patient%20by%20Jason%20Binford.pdf
The five factors are discussed in this opinion starting about page 6.
http://www.paed.uscourts.gov/documents/opinions/08D0933P.pdf
Plan ahead. DIMEQ will not continue to trade after confirmation, appeal or not. You will be locked at that point.
Before the sunshine pumping gets out of control, not only is Class 18 not out of the question, overlook it at your own peril.
http://www.kccllc.net/documents/0812229/0812229111111000000000008.pdf
Read the last 5 pages of that brief, carefully, including every footnote.
Furthermore 510(b)is a mandatory statutory requirement that is liberally construed, and the case that the debtors cite the most, which was affirmed on appeal, is none other than a case decided by one M. Walrath.
Well, considering wamuq is topped at 3.5 cents/share, and the downside is zero, I'd take that bet. CEMJQ shareholders were screwed by a couple of hedge fund turds. If they could have kept their collective mouths shut, cemjq would have paid an additional dollar.
It's actually the court determined enterprise value (EV). Valuations given to reorganized entities for distribution purposes are based on the re-org EV. JohnnyWinter's calculations are wrong, in that they don't account for any DIME reduction, nor any court adjusted % reduction. In other words, 3.5 cents is the very high end. Even if the reorganized newco turned out to be twice the estimated EV, you still have a top value to common at 7 cents. The bottom is still zero, in either scenario.
Please, that woman continues to spew mindless drivel.
It's not that simple, nor am I a tax attorney. That said, the reason why debtors get trading restrictions placed in a court order is to try to prevent 5% or more holders from selling their positions. Each 5% turnover counts against the 50%. Furthermore, it is a total turnover over the course of a certain amount of time, like 2 or 3 years (so if you get 10 5% sellers you already are over the limit). Then, even if there is an ownership change greater than 50%, there is a reduction formula of some sorts, they just don't all go away. And then on top of that, there is a special exception that can apply in some bankruptcy situations that may make all that other stuff moot.
You have to add the 5%'ers with the reduction of total ownership to creditors in a re-org, over the period of a set time, see what you have, or see if the special exception applies.
If you are a DIME holder, the last thing you should be thinking about is how to save the NOL's if it means that YOU will take a bath to make it happen. That's why I don't give a s..t about NOL's.
Probably best to do some goggling, instead of reading my post.
The NOL's, yeah, a subject heard all to often. Maybe that is the reason the debtors (with the EC's urging) put DIME pari passu with WAMUQ and basically treated DIME as a class B common, thus not really affecting pre or post confirmation ownership.
But, if the NOL's go poof because of DIME getting paid, so what, it is not an impediment to plan confirmation.
What do I mean? It's simple. There is a claims reserve for DIME. They get class 12, they get the reserve, ie 337 million, or equivalent value.
PIERS go poof, and whoever else under 12 (unless subject to a 9019), except for the value given to the preferreds and commons, unless they get hammered by the 2nd step death trap.
It's accounted for in the current plan version. Like it or not.
I don't like this late mediation. The debtors can use it against DIME at confirmation. Right now, the debtors have installed a double death trap in the POR for equity (quite clever I may add). I wouldn't expect anything different for DIME.
I have a question, or rather a statement, that I believe this entire board will agree on.....and that is...a Litigation Tracking Warrant, the security in itself, is not common stock. To think that a LTW, the security, is common stock, would be the equivalent of saying there are two trading classes of wamu common stock, such as a class A common stock (wamuq) and a class B common stock (dimeq). Agreed? Seems easy enough to understand that DIMEQ is not common stock in its current form.
So now, let's look at the plain language of 510(b):
(b) For the purpose of distribution under this title, a claim arising from rescission of a purchase or sale of a security of the debtor or of an affiliate of the debtor, for damages arising from the purchase or sale of such a security, or for reimbursement or contribution allowed under section 502 on account of such a claim, shall be subordinated to all claims or interests that are senior to or equal the claim or interest represented by such security, except that if such security is common stock, such claim has the same priority as common stock.
The debtors are relying on 510(b) to place DIMEQ in class 21 and give them pari passu treatment with WAMUQ. I submit to anyone that this is patently wrong. Pari passu treatment with wamuq, would, from the plain language of 510(b) be predicated on DIMEQ being common stock. It is not.
It can be argued that the 'vehicle' by which the DIMEQ holders may be compensated can be common stock, but that is a totally separate issue. Therefore, given the LTW's, the security itself, is not common stock in its present form, the only plausible conclusion is that pari passu treatment with common stock is not consistent with the plain language in 510(b).
Furthermore, the plan construct doesn't even acknowledge anything otherwise, as it deems the LTW's as common stock, such as an imaginary class B common stock, because it doesn't provide for a conversion calculation to even get it to the point of representing common stock. The assumption is that it already is, and nothing needs to be done.
For lack of better terms, the debtors are ignorant. I'd assert that DIMEQ is, at a minimum, ahead of priority than common stock, because as a practical matter, it isn't common stock, and is conflicted with the debtors analysis of the plain reading of 510(b).
IF subordination applies, I don't see any way other than Class 18.
Given the posture of the case at it's present point, if there is no settlement, my guess is Class 18 @ 60%, Class 12 @ 40%, and Class 21 if she flat misses it.
I wouldn't get all excited about mediation. As the plan is currently proposed, and all parties to the plan mediation have agreed, the only possible impediments, in the plan's current form, is to determine whether or not DIMEQ can vote, can appeal a ruling on the class litigation, and put a value on DIME's portion of the 30% allotment of newco.
Any other resolution is either provided for in the plan, or will blow the plan up (like a recovery provision for class 18).
I honestly don't think the debtors would be willing to give the LTW holders class 12 status in any amount that they would accept. The debtor's history is to disregard DIMEQ throughout the entire process. Only now, they put in treatment as equity. The only reason class 12 was ever in the equation is because the court established the reserve. The liquidation analysis didn't include DIMEQ as a possible class 12, or even a subordinated claim.
So all of a sudden they will pay? I don't think so. This mediation is for scraps. This is for the debtor to say, we think you're worth a nickel a share, but we may be gracious and give you an equity value that gives you 9 cents.
Just look at the plan construct that determines DIMEQ's percentage of pari passu recovery. 4 options, and none of them are correct. The EC has agreed to those 4. Art will not. Why? Because if DIMEQ is determined to be common stock, then the debtors would have to do the proper conversion that is provided for in the LTW Agreement. There is a specific mathematical equation that the debtors (and the BOD)would have to follow to make the conversion correct. The plan doesn't follow it. Therefore, the only way you get from point 'A' to point 'B' is by breaching the warrant agreement yet again.
The EC is pleased because all the EC members will be able to vote themselves to be on the Board of Directors of the newco WMRRC. They will cover any losses with a nice fat salary and options in the newco. Willingham will vote himself chairman and most likely ceo.
Duh people, that's why.
And one more thing, I am certain they have suspicions that Walrath will put the kabosh on the 70-30 split, and may re-distribute that allocation.
But that has nothing to do with their new-found BOD positions.
Willingham may draw a BOD/CEO and Litigation Trust Advisory Board salary. I'm sure he's pleased.
As of now, it is extremely favorable that Steinberg & Co was left out of the mediation. The debtors and EC could have struck the very same deal with them there and said "as a result of arms-length negotiations and the business judgment rule..yada yada", this is the deal. People need to realize that 'included in the negotiations for business judgment purposes' can easily translate into 'we know you're in the room, but go to the corner and stfu'. Same thing.
(Face Palm) In order for any blithering fool that is paying 9 cents a share for wamuq at this point to break even, the newco's enterprise value will have to triple from the plan value.
That is only if DIME doesn't affect the treatment. If DIME becomes an issue with equity treatment, and the conversion comes out like it should, the newco's enterprise value will have to grow from 220ish million to approximately 4 billion to break even paying the current 9 cents.
I highly doubt scenario one will happen and I'd bet my life against the other. Ain't gonna happen.
Where in the hell do people keep coming up with this 'billion' value number?
The disclosure statement gives clear guidance on the available value to be distributed to the entire common equity class, whether it includes DIME or not.
That number is 57 million, which is 30% of 190 million (the total distributable value to preferreds and common combined).
57 million divided by 1.7 billion = .034 cents per share. That is what commons are worth without a DIME dilution.
The DIME dilution, if it comes, is not anywhere close to being clearly explained in the Disclosure Statement. Matter of fact, someone ought to be kicked in the pecans for putting that 500 word long single sentence in there.
Since there is to be 200 million shares of NEWCO issued in exchange for existing interests, it roughly translates to a buck a share for simplicity's sake.
Therefore, a holder of common now will have to exchange approximately 33 shares to get one NEWCO share.
IF DIME gets thrown in the mix, I couldn't honestly tell how the dilution will go. But I do know the existing commons will take a beat down from .034 cents. They may wind up with an exchange rate of 200 to 1 NEWCO share.
If DIME got the entire 57 million, which won't happen, it figures 50/cents share for DIME.
How the newco performs and how the market prices it is a wholly different matter.
If anyone believes that, they need to seek mental help.
The trustee for the PIERS blew this mediation. The debtors have done another pathetic job of disclosing the true value and risks associated with a DIME win. The estimation tables puts it at 9%, and the market is trading it at a slight discount.
Approx. .004 cents per share if DIME is figured in. WooHoo !