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Yes, I'm starting to lean towards all shares. Of course, that is not my preferred payout as I think it will be a bitch to cash the shares out with everyone else at the same time. However, it may happen due to my tax deferment speculation.
Of course the shares will not be worthless. They'll represent the full value of all returning cash plus remaining illiquid interests. However, in the short run, you may see plenty or hair raising price instability as a lot of retail may rush to the door in the early months to cash out. But if you hold, I thini the shares will be worth more in a year or two than straight forward cash liquidation right now.
No, WMIIC has not been closed as of last 10q filing. The exact wording on page 8 is:
WMIIC does not currently have any operations and is fully eliminated upon consolidation.
They've talked about closing it down since 2016 June 10q. Isnt it amazing that it has been more than a year since they've mentioned that and still havent been able to dissolve a sub with supposedly "zero assets". I have personally dissolved companies before and it doesnt take over a year for "paperwork" to dissolve a company with "zero assets" and "zero liability".
Again, the more probable explanation is they havent been able to close the merger with legacy safe harbored assets (2.9% interest profit rights to the $300 billion wamu loan portfolio) which are suppise to come back through WMIIC.
I believe all "cash" returning requirement for WMILT only applies to the assets of the bankruptcy that were being liquidated.
Safe Harbored assets are bankruptcy remote so the same cash liquidation rule does not apply.
There is a reason that the last remaining sub under WMILT is named Wamu 1031 Exchange.
I believe taxes on the portfolio earnings have been deferrex while in safe harbor.
Since 1031 exchanges for tax deferrment generally applies to "like" assets, it is reasonable to assume escrow holders getting 3.5 billion shares of WMIH and not liquidated cash since, their original shares were in stock form.
So I believe in this case, WMILT will simply be used as a pass through mechanism by Wamu 1031 Exchange to distribute the new 3.5 billion shares.
Wamu 1031 Exchange corp does not have any assets in itself. It is a tax deferment transfer medium between escrow markers and safe harbored assets. I believe the 2.9% profits collected from the $330 billion Wamu loan portfilio since 2008 plus any remaining future profit interests now will return to WMIIC. Those tax deferred "assets" (i dont think taxes have been paid on profits in safe harbor) which belongs to WMILT will then return to its last subsidiary - Wamu 1031 Exchange.
I believe WMIH will exchange 3.5 billion shares for all those assets (cash + remaining interests in future loan portfolio profits) with Wamu 1031 Exchange.
Wamu 1031 Exchange will then distribute the 3.5 billion shares to escrow markers by using WMILT as pass through.
Tax on those interest profits are now deferred until escrow holders sell their newly aquired WMIH shares.
WMIH will then be valued at all merged assets from safe harbor (cash + remaining interests in future loan portfilio profits) divided by new 3.7 billion shares base (3.5 billion to escrow + current 200 million shares).
In the end current 200 million shares will get a free valuation ride up. But escrow owners will still own 95% of new dilutes company. Win win for everyone but a big big win for WMIH BOD members who have been collecting millions of shares since 2012 for their "service".
As I was saying in my earlier posts, I think the key here to the date is the Wamu 1031 Exchange. I believe the safe harbor assets will flow back through WMIIC to Wamu 1031 Exchange corp. WMIH will then need to do a deal with Wamu 1031 Exchange to exchange 3.5 billion WMIH shares for those assets. WAmu 1031 Exchange will then pass those 3.5 billion shares back to escrow by using WMILT as a pass through entity.
Since...
1) Wamu 1031 Exchange is set to dissolve by Dec 31
2) WMIH series B expiring early January and no large volume dumps of big WMIH holders or BOD members as of today
3) Still havent seen an 8k from WMIH regarding NASDAQ delisting notice (monday was 30 consecutive day of WMIH trading under $1)
I think we maybe seeing an announcement of merger by WMIH within a few days. If you dont see an 8k by end of Monday of NASDAQ delisting notice, it is highly probable that the merger has been approved and we are currently sitting in a SEC mandated quiet period.
Unless Wamu 1031 Exchange is extended into next year, I dont think this saga will stretch past 2017.
We dont own the principle of 300 bil portfolio. I believe we only owned about 30 bil of the principle. However, I believe we own the rights to the 2.9% interest profit margin on the whole 300 bil portfolio - as indicated in the 2007 Wamu 10k. My best estimation right now of total minimum value returning to escrow is $80 billion.
Why was WMIH allowed to trade if $ 6 bil NOLs were its main assets? If they were the main assets the BOD would not have taken the risk of losing them by allowing the shares to trade until after merger. There would ne no gurantee of 50% ownership change with the trading and hence losing the NOLs.
Here are my top two speculations..
1) BOD got to gift themselves millions of shares since 2012...for their "services" for attempting to "find" a good merger. These shares will get a huge upside freeride with the 3.5 billion shares for value exchange with safe harbor assets.
2) No need to worry about losing $6bil NOLs with trading of 200 million shares, when 3.5 billion shares will be going back to the original owners of the estate - no threat of 50% ownership change
How did a shell company like WMIH land series B financing at 3% interest? It takes a lot of confidence for people to loan money at such low interest rates? Do you know who can command 3% interest rates? Full faith of US government - treasury notes.. So how did humble WMIH get 600 million at 3%? Was it because the lure of 6 billion NOLs were so unique that there were public companies lining up to merge with it? or did insiders know for certain that there were large safe harbor assets returning that it had to merge with eventually - perhaps for tax deferment reasons?
Hmm.. which is more likely if you are going to lend a shell company money at 3% interest? I guess many naysayers here will like you to believe the all powerful lure of 6 billion NOLs.
You will never see that asset list. Thats why is called "Safe" Harbor. The purpose of safe harbor is to keep the large loan portfolio from being forced to liquidate to meet creditors demands in a bankruptcy. Forced liquidation of the loan portfolio would have spooked the MBS market further more and could have caused further mark to market mark downs at other banks. Additionally, once you start artificially marking down paper losses (mark to market) you would have threathend the deposit base that the loan portfolio had to pay back with potential solvency issues. The deposit base guarantee is FDIC #1 concern and that is why safe harbor exist.
So do you doubt that such an important protective tool as Safe Harbor was not employed to shield the $330 billion Wamu portfolio? the largest savings and loan in history to be taken over by FDIC?
Also, why didnt a single BOD member sell a single WMIH share when the stock was over $3? Or a single share as the price tanked to 60 cents?
With series B coming due in early January, and the lack of panic dumping (large volume) by any large funds, is it not reasonable to expect that people in the know may know something?
Gees, I wonder if its because WMIH has such unique valuable assets on its own that all the hedge funds and BOD members are confident that there are public companies lining up to merge with it before January...or is it because they know a sure thing like returning safe harbor assets that it will merge with for tax deferment reasons.
Again, I will list my probable theory. Safe Harbor assets (collecting interest with tax deferred since 2008) will return through WMIIC and go to Wamu 1031 Exchange. WMIH will offer shares for value exchange to Wamu 1031 Exchange for the assets. Then Wamu 1031 Exchange will flow the 3.5 billion shares back to escrow markers via utilizing WMILT as a pass through entity.
Its just my hypotheses for now but I think they may also get the cash in the exchange due to tax deferment reasons. I dont think the interest profits collecting in safe harbor for the last 9 years have been taxed. So I'm just theorizing that they may sweep everything including the cash in the shares for value exchange and run it through the Wamy 1031 Exchange corp. You can think of us escrow holders as simply participating in a new "IPO" where the new merged WMIH simply has all the assets fron the safe harbor..where escrow holders will own 95% of the new IPO (3.5 billion shares) and current WMIH stock holders will own 5% of the new IPO (200 million shares).
Just think of the 3.5 billion shares exchange like a new IPO for the escrow holders and think of the current 200 million shares getting a free valuation upside ride like a middleman fee like Goldman Sacs doing the underwriting for the "IPO".
After a stock for value exchange, the new valuation will be based on the income stream of remaining ABS certs and all the interest profits cash collected over the last 9 years. Current valuation of the existing 200 million shares wont matter anymore. It will whatever safe harbored assets we merged with divided by the new 3.7 billion shares base. Current 200 million shares will simply get a free upside valuation ride with the 3.5 billion share exchange saturation.
I think Wamu 1031 Exchange is the key mechanism here. If safe harbored accrued interests money were not tax deferred, I would imagine either FDIC or JPM would have reported taxes paid on the off balance sheet assets that were reported in previous years. So I think there needs to be some sort of tax deferment mechanism to return tose profits back to escrow. What better way than shares for value exchange with WMIH.
Again, I think the key mechanism here is Wamu 1031 Exchange. Fortunately, we do not have much longer to wait to find out as it is due to close down by end of this year.
My most logical hypotheses right now is that the merger has been approved and we are simply in a SEC mandated quiet period. I think if we do not see an 8k disclosure by end of Monday of NASDAQ delisting notice, I think it is safe to assume that we are in a quiet period.
I agree with your concern. I would be afraid of massive dumping (cashing out) by everyone if everything returns in WMIH shares. But I'm also wondering about the potential tax deferrment of interests accrued under safe harbor. I do not prefer it but that might be the reason we may get everything back in shares via Wamu 1031 Exchange.
I understood your reasoning. It is true for all the assets available to WMILT at the time of POR. However, is it not possible for the safe harbored bankruptcy remote assets to come back to escrow via WMILT as a pass through entity? I was speculating perhaps that is the reasoning for the Wamu 1031 Exchange to exist. Perhaps, all the interests accrued in the ABS trusts would have been tax deferred and they would return via WMIIC to Wamu 1031 Exchange. WMIH will then offer stock for value exchange to Wamu 1031 Exchange for those assets (cash plus remaining illiquid assets). Wamu 1031 Exchange will then pass those WMIH shares back to escrow through WMILT as a pass through. Tax is then deferred until we sell our new shares. Just a speculation...
Safe harbored assets were bankruptcy remote, so I dont think they could have been legally addressed in the POR.
Company should have gotten a delisting notice from NASDAQ today and they would have to announce that by end of the week...unless stock for value merger with WMIIC safe harbored assets has already been approved and we are in a SEC mandated quite period. This would be highly likely if we dont hear any press release regarding NASDAQ delisting warning by COB Monday.
Why is there no delisting notice from NASDAQ after 30 consecutive days of below $1 trading? Additionally, why is there no announcement of reverse stock split as BOD suggested earlier in the summer to counter below $1 trading. IMO, SEC must have already been informed of pending merger with WMIIC returning assets.
I still think we are in some sort of mandated quiet period before the merger. No other logical explanation. Either we hear excuses from BOD or warning from NASDAQ for this sub $1 trading. This "quiet" period logically suggests a pending merger.
AZ, is it possible that safe harbored assets returning to WMIIC would flow back to escrow holders via Wamu 1031 Exchange? It states on their company overview that the Wamu 1031 Exchange handles tax deferred exchanges. I would think all the interest collecting in those ABS trusts would have been tax deferred for the past 9 years. So any assets returning to old WMI shareholders (escrow) would need some sort of tax defer medium.
If this is the case then we know for sure that escrow should see something by this December since Wamu 1031 Exchange is set to dissolve by 12/20.
Very interesting! It could potentially imply that any safe harbored assets coming back to WMIIC would have been immediately flowed back to WMILT and hence would not be reported on the WMIH 10q balance sheet.
My theory is that the returning safe harbor assets from the ABS will pass through WMIIC to Wamu 1031 and then to escrow via WMILT. Since Wamu 1031 is suppose to end before end of December, shouldnt there be some sort of language in WMIH 10q stating that WMIIC will be dissolved by end of 2017?
I know. I believe safe harbor assets will return with its dissolution. That's why I was so hopeful in June 2016 when 10q announced that they are in the process of dissolving WMIIC. Now in the latest 10q I no longer see that language.
Ron, the odd thing is, the 10q no longer mentions that they are in the process of dissolving WMIIC like in previous 10 q. It now only has that one line statement..
WMIIC does not currently have any operations and is fully eliminated upon consolidation.
Where's the talk about dissolving WMIIC in the 10q?
No 10q yet? I wonder why :)
There are only 2 possible mechanisms left for escrow money coming back from safe harbor.. Wamu 1031 exchange and WMIIC. 1031 is set to terminate by latest 12/20/2017. I believe WMIH already announced that they are in the process of eliminating WMIIC since June of last year...so why the big delay?
Where's the 10q?
AZ, wouldn't DB probate resolution have deposited some cash into WMIIC in September? If so wouldnt WMIH be required to report that in the next 10q? If they are required to report then we should hear the merger announcement before 10q release. Maybe that is why they are delaying the 10q release. Maybe we have been in a quiet period for the last month as mandated by SEC prior to merger announcement.
That's how I originally read it years ago. I'm just not 100% sure now. All safe harbored assets returning to escrow makes sense in the legal liability of having zero disclosure during safe harbor. Since, escrow cant be traded, it makes no difference with any disclosures of safe harbored assets. However, if a percentage of the safe harbored assets made its way back to WMIH, there could potentially be disclosure liabilities since old escrow holders could have sold their stake in WMIH.
However this may sound logical, I'm still not 100% sure.... or of anything else in this bankruptcy.
Exactly! I've struggled with that question for some time. Are beneficiary interests in ABS trusts considered "assets" or "equity"?
AZ, I also find it humorous that it is almost a year and a half since WMIH announced that they are dissolving WMIIC and yet here we are... I guess, it must be a lot of work to dissolve a sub with supposedly having "zero assets"...
Ah, I see. Just to repeat what you are saying... The escrow markers own a percentage of the returning cash from the ABS trusts and WMIH also owns a percentage.
So from your study of these ABS trusts, do you know what percentage of the beneficiary interests are owned by old WMI equity escrow and what percentage by new WMIH?
Thanks again for your clarification!
AZ, that is the question I had. Since WMIH owned the "equity" interest of WMIIC, wouldnt that imoly that all the ABS trusts that were collecting cash interest behind safe harbor since 2008 would return to tge new WMIH and not the old WMI equity escrow markers? So escrow is essentially worthless?
AZ, this is where it gets a little murky for me. Wouldn't most of the returning assets to wmiic then directly belong to the new WMIH company and not the old WMI equity escrow?
AZ, are you saying that you believe most of the safe harbored assets will return through wmiic amd not through wamu 1031 exchange? Thanks in advance
AZ, I'm starting to believe that Piers will be left impaired as you say. In that case, can you please inform us again, the legal basis that allows the safe harbored assets to return to common and preferred escrow markers by utilizing wmilt as pass through? and bypassing Piers in the payout matrix?? this legal basis would also ignore the 75/25 split speciefied in the POR7 I assume?
johnny, my predictions of merger timing at this point are moot because I really believe we are in the final inning so one way or another this is coming to a close by end of this year. However, I hate to be wrong in my analysis. I originally thought we should have had the merger announcement back in September with the end of DB probate. Who is managing the assets from the DB trust at the end of probate? I thought the merger with WMIH should have followed. Well, maybe I was not wrong with my original thesis. What if the merger was filed with the SEC at the ebd of September and we are in the mandatory quiet period? That would explain the lack of communication from BOD to defend the stock slide or announce an update to the series B financing agreement.
IMO, we might be in a quite period. Merger might have been already filed with the SEC and hence we are in a quite period. Somehow, market makers may have gotten a leak of it and hence the tree shaking with low volume. Its the only explanation for these large 5% moves with trading volume less than 0.5% of float. The question now is how long do typical quite periods last for mergers this size.
I still think we may have an announcement by Friday of total Piers payoff next week...so they will likely announce the merger before then. I think total Piers payoff would tip off the entire market that WMIH merger with escrow assets is imminent. Hence, I believe they will need to announce the merger before Piers payoff this Friday or coming Monday.
No one on the BOD has sold a single share as this stock tanked from $3 to 80 cents...even in the face of a disastorous January with the end of $600 million financing deal. Isnt that a vote of confidence? Additionally, look at how many postings there are on the WMIH message board vs how many there are on Lehman or AIG board. That's pretty good for a "bankrupt" stock with nothing coming back huh...
AZ, watch the price end at $1.00 today. I think you are right. I have a feeling about merger on monday.
AZ, shouldnt there be an 8k filing by now if WMIH no longer has the $6b NOL available for use?
Imo, lower price pressure is good for us. Especially if it threatens delisting from Nasdaq.
1) Allows strong longs to collect more shares
2) Scares weak longs into selling. This is good as these guys will not be around to sell into any sudden pop in price when merger is announced.
most importantly...
3) pressures the board of directors to move up the merger schedule or disclose a plan of merger before the share price gets dangerously low.
My initial prediction is playing out. Every week that we dont hear a merger in October, share price will drop 10%. This will get close to 50 cents if we dont hear anything by end of October.