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Thanks Doc. Btw, full disclosure: I am not an attorney or an insider. I do not work for any hedge funds. I am just a private investor.
I just want to say for the record, publically, what I think really happened for posterity. I'm not trying to influence anyone here for investment decisions.
I'm only posting now after all these years because I think there is nothing anyone reading my messages can do now to affect the bankruptcy outcome. The die has been cast and the results should conclude soon...hopefully by the end of the summer.
How could FDIC "legally gift" Wamu to JPM for a paltry $1.9 billion?
Simple Answer:
strip the bank of its income stream...the 2.9% interest margin income from the $300 billion loan portfolio sitting behind safe harbor.. no income means the transfered bank assets can "legally" be jistified as worthless.
when one looks for conspiracies, one can miss the simple logical answers right under our nose
if anyone has access to an attorney who is familiar with FDIC safe harbor rules and regulations, can you please ask him/her what the safe harbor exit time requirement is upon FDIC receivership closure? that way, we can all know exactly what the time countdown should be.
I agree. but I think the hedge funds own a bigger common escrow shares that you think. If I recall, original outstanding shares before they raised money in 2007 was 900 million shares - then it became 1.7 billion shares by Sept 2008.
So if only 1.2 billion shares signed the waiver, I think it is more likely 800 million signed shares belonged to the hedgies and 400 million belongs to individual investors like us. Only a few hedgies control 800 million shares and I would assume they were closely watching the bankruptcy and signed the waivers. I think the 500 million that didn't signed were individual investors and mutual funds that weren't paying attention. After all, we were only given about a month to sign and return the release forms.
If safe harbor assets dont come out within a few month after FDIC receivership closes, then I would look into lawsuits for fraud. Until then, FDIC has not broken any laws.
So, imo, after DB probate closes, and FDIC receivership closes following, we should see safe harbor returns within 3 months after. Contact lawyers if we dont then.
Since DB probate is about to close next month, I dont think we have to wait until 2019.
it doest matter if DB is trustee of all or most of $300 billion portfolio. once probate ends, so does the FDIC receivership, then safe harbor assets follows
DB probate should trigger the entirety of safe harbor exit. doesnt matter what percentage trustee controls
2.9% interest margin on $300 billion portfolio
about $30 billion of principle owned by wmi in 2008
I think we are looking at $100 billion+ treasure chest after 9 years
seamus, i really don't have a good guess but it doesn't matter. I just know from the total number of $300 billion portfolio, that wmi originally owned most of the interest income stream from that last 2007 10k filing. wmi owned a 2.9% interest margin (total interest income - interest cost to deposit base etc..) on that $300 billion portfolio and about $30 billion of the principle.
the reason i am really excited about the DB probate is that it will definitely end the receivership and hence trigger the release of safe harbor.
remember, safe harbor is a legal isolation from both FDIC and WMI bankruptcy. That is why the judge/hochberg could not address it during the bankruptcy, or is it showing up on the FDIC receivership balance sheet. The WMI bankruptcy has been settled. We just need the FDIC receivership to close so that we can see what's in our treasure chest.
let's just all pray for a speedy probate and no more last minute lawsuits to tie up the receivership.
seamus, I do not know what percentage of the original $300 billion loan portfolio are controlled by DB as trustee but it had to be in tens of billions. DB originally sued FDIC for $13 billion in loan put back claims. So I think the portfolio that they are in charge must be tens of billions in order for them to sue for $13 billion in putbacks.
I do not believe FDIC simply "gave" the $300 billion portfolio income stream to JPM. Thats why JPM had like $150 billion non performing deposits. I believe thats the deposit base that they inherited from Wamu from the bank purchase. Thats the deposit base that WMI already used to fund part of the $300 billion portfolio. That deposit base is still being serviced by the $300 billion portfolio in safe harbor but JPM cant use it to fund new loans for themselves.
I'm just glad that the conclusion of the DB probate would end the last lawsuit for the FDIC receivership before they can close it. Once the FDIC receivership closes, then we can see whay ee have in the safe harbor.
WMIH hidden value is not about NOLs. I do not think David Tepper or Greywolf would have been in this shell for this long for simply undervalued NOLs. There are much better speculations out there. I really think the hidden value is the potential stock for value exchange with whatever loans left over at safe harbor exit. As I've pointed out in my recent posts in the last week, this stock can easily reach a diluted price of $10 if there was an exchange of 3.5 billion shares with escrow holders for just $35 billion portfolio. This is valuing NOLs at zero. I think this kind of merger with the returning safe harbor assets is the sudden jump in valuation that people like Tepper would be speculating on.
Reiko, thanks for the correction. My mistake. I didn't realize he owned over 65 million shares to start with. Interesting.. that means he owns almost 32.5% of total escrow.
It will be interesting to know which funds added huge positions between Feb and Oct of 2016.
goodie, if they had issued 4.8 billion shares of a common marker, the weighting math for both common and preferred 75/25 split would have been accurate to better than 0.001% round off error. If they want more accuracy, they can simply keep increasing the total number of shares for a common escrow marker until all equity parties can agree on the round off error percentile.
Like I postulated, if the 75/25 was supposed to be all the way through, and I'm the attorney representing preferreds, I would have insisted on a common escrow marker to guarantee me that I am not discriminated years down the road when distribution happen.
I'm sure the attorneys representing the preferred holders were much smarter than I am. So if I can see this potential loophole down the years, I would have made sure from the start and insisted ob a common escrow marker ti ensure 75/25 all the way through.
temocat, the return of safe harbor assets will be swift and decisive. Once any asset returns from safe harbor, all should be returned swiftly as FDIC do not want to be held responsible for "mismanagement" ofuture liquidation of any illiquid assets left with them. They wouldnt open themselves up for potential lawsuit liabilities. Thats why I believe once the receivership is resolved on approval of DB probate on June 16, the safe harbor assets will shortly come out thereafter.
My estimatiin is that there are at least $80 billion of interest cash that the portfolio has collected over the past 9 years, about 25 billion of principle ownership and up to $60 billions of loans left.
The beauty of the 3.5 billion shares exchange with WMIH for the remaining loan portfilio is that it legally allows FDIC to return the illiquid assets in a "publically valuated" fashion. See my posts from yesterday where I explained why dilution of WMIH with 3.5 billion shares is actually a good thing for current 200 million shareholders.
So bottom line. I think escrows get 80 to 105 billion in cash and 3.5 billion WMIH shares for the remaining loans. My guess of WMIH share valuation afterwards is $10 to $20 per share.
goodie, it cant be fractional shares problem. They solves that issue when they split 200 million wmih shares between the old common and preferreds. There is always weighting math that can solve the distribution of a single marker.
All I'm saying is that if you want to make sure that 75/25 split is all the way through, you jist need to isuue 1 single marker up front and split those markers 75/25. That way, when the time comes you cant discriminate commons from preferreds. everyone has equal benefits guaranteed by the same escrow marker and based on number of markers already distributed 75/25. This way, there is no record of who is common and preferred and totally impossible to discriminate. If I were the attorneys, this is the way I would have proposed initial escrow markers "if my main interest is to ensure 75/25 split all the way through years later"
W3Research, I don't know what the distribution is going to be among the preferred/common escrow markers. I am not sure if the 75/25 split is all the way through. I have this nagging question in my head...
"Why issue different escrow markers for preferred and common is everything is supposed to be split 75/25 all the way through? Why not just issue 1 common escrow marker and split the markers 75/25 like they did with the initial 200 million WMIH shares?"
Anyway, I don't know what the final split will be but my estimate of how much returning to the estate is between $80 and $165 billion.
I can't say "I am not uncertain" about the figure though :)
Here's the "redistribution" of Appaloosa WMIH holdings.
Appaloosa LP 7.6 million shares
Appaloosa Investment Limited Partnership I 3.8 million shares
Palomino Master Ltd. 3.8 million shares
Appaloosa Management L.P. 3.8 million shares
Appaloosa Partners Inc. 3.8 million shares
David A. Tepper 7.6 million shares
Here's the link to the Form 13G showing the new holdings signed by Tepper.
https://www.streetinsider.com/SEC+Filings/Form+SC+13GA+WMIH+CORP.+Filed+by%3A+Appaloosa+LP/12131594.html
As you can see, he never sold the shares. He just redistributed between the various holdings for what I'm assuming is to take advantage of his new Florida residence. It looks like some of the funds may be for the benefit of Appaloosa "management" and some for "partners".
I hope this helps. If you have any research into these other funds, please add to the thread.
Justice, I agree. We will know shortly who the beneficiaries of whatever trusts DB is trustee off as the assets will be distributed after Judge approval on June 16 probate hearing. Purpose of probate is to end the trusts and DB cannot ne discharged as trustee until all assets in trusts are returned to beneficiaries. I believe the purpose of June 16 probate hearing is for the final approval of distribution plan. So we will know shortly who the beneficiaries are :)
stoxjock, the 3.5 billion will go to the escrow holders since they are the beneficiaries of whatever is coming back from safe harbor. I assume the cash will go directly to escrows and whatever loans that are left will go to WMIH in return for 3.5 billion share exchange
No, the "Appoloosa" fund sold half their shares...but the shares were just sold to 4 other funds that Tepper controlled -- one of them being his personal fund. Don't ask me for a link, I did some accounting when this news broke and I traced it to the positions gained in 4 other funds that Tepper controlled.
dont worry. there will be plenty to go around :)
Btw, Appoloosa never sold their WMIH shares. If you pay close attention to the 13F filings, they basically redistributed their shares among 5 different funds. One of the 5 is Tepper's personal fund. I think it was done for state income tax reasons.
Reiko, that's the beauty of it. It doesn't matter what the current 200 million shares of WMIH is valued at. or does it matter what the $6 billion NOLs are worth. It is a deceiving to think that 3.5 billion shares exchange will need to happen at the current price of the 200 million shares WMIH..say $1.25.
That's the whole beauty of the 3.5 billion shares dilution. Let me explain.
Let's say when safe harbor releases, the remaining WAMU portfolio is worth $35 billion (the illiquid portion). 1 of 2 scenarios could happen. In the first scenario, a third party, like JPM can offer to buy it from WMILT with $35 billion cash or JPM stock. Even if that transaction is valued properly, escrow holder can still sue JPM, WMILT, or FDIC for "undervalued" sale -- because that valuation wasn't "voted" on by the open market. However, in second scenario, what if the portfolio was exchanged for value with a shell company like WMIH say with a valuation of zero. Well, if you make the exchange such that escrow holders only receive 50% of the merged company (say 200 million shares exchange), then escrow might still be able to sue WMILT/WMIH for undervalued exchange. However, if the exchange is for 95% of the merged company (say 3.5 billion shares exchange) then escrow holders will have very little ground to sue on because the new share base will be publicly priced by the market for whatever it thinks that "$35 billion portfolio" is worth and the escrow markers will be guaranteed at least 95% of that valuation (because they now have 95% of 3.7 billion shares outstanding).
So as you can see, it doesn't matter what the current 200 million WMIH is worth, nor does it matter what the future value of $6 billion NOLs is worth under upcoming Trump tax plan. As far as I'm concerned, current 200 million shares can be worth zero. However, when it dilutes itself with 3.5 billion new shares, assuming the exchange is for a multi-billion loan portfolio (say $35 billion, the new valuation of the total 3.7 billion shares will be determined by the market valuation of said loan portfolio.
Essentially, the current 200 million WMIH shareholders will be free-riding on the valuation of the new 3.5 billion shares issued -- which would be valued against the large loan portfolio that its merging with.
barefoot, the dilution is actually good for current WMIH shareholders in my opinion. I know this is counter intuitive but let me explain.
Most people here currently assume that current WMIH valuation is in the 6 billion NOLs. I say that is deceptive. Lets just assume for now that those NOLs are worth zero. There are currently 200 millions WMIH shares. Lets say the illiquid portfolio coming back from safe harbor is worth $35 billion. Lets say WMIH issues 3.5 billion shares to escrow holders in exchange for the $35 billion portfolio. I ask you. What do you think the "diluted" stocks are going to be worth.
The answer is they will be worth around $10. Since the dilutive shares are 3.5 billion and the original shares are only 200 million, the total valuation is essentially going to be worth whatever the portfolio is valued at... in this case it will be $35 billion / 3.7 billion total shares... approximately $10. This is on the conservative side of valuation.
As you can see, it doesnt matter what our cureent $6 billion NOL is going to be valued at with new Trump Tax. The main valuation jump for current 200 million shares of WMIH common stocks are going to come from the 3.5 billion shares "dilution" for the shares exchange with escrow for whatever illiquid loan portfolio is left in safe harbor.
bbanbob, no employee claims needed, just probate and receivership closure required.
In my opinion, the receivership can close once DB probate is approved, and final distribution of that $2.7 billion in FDIC-R can be made.
Once receivership closes, then safe harbor assets are free to come out. Once safe harbor assets come out, WMILT can simply set aside like $100 million for the employee claims and pay us cash and merge the remaining portfolio with WMIH for 3.5 billion shares.
hotmeat, i think that is the point with the receiver. they need to show that they have nothing left for wmi estate at the end..like they have been claiming for a long time. I dont think there will be more than 2.7 billion in the receivership for the sale of the "bank". dont go after book value assets from JPM. we will never see any of that.
However, we still have the crown jewel under safe harbor. The $300 billion loan portfolio where we own a 2.9% interest profit margin and about $30 billion in principle value on day one of bankruptcy. That 2.9% has generated about $80 billion in profit up to date. This is what I am looking for. This safe harbor asset was legally shielded from bith wmi creditors and the fdic receivership. As you know, wmi creditors have been paid so once DB closes out with probate and the FFIC receivership closes out in the "red", safe harbor assets can legally come back to the estate
WMIH needs to do a merger by early Jan 2018 or its in deep shit. So I dont think Nov 1 payment is likely. Merger probably needs to happen earlier. Who knows, maybe they'll push forward the June 16 court date. Also, I'm sure JPM would want to book that $600 million return from FDIC into their second quarter. I have a feeling we'll be seeing distribution in July or August
hitmeat, its stated in the JPM-DB-FDIC agreement that JPM hets paid within 10 days from effective date. If probate judge approves DB distribution on June 16, that will mark the "effective date". So I'm thinking JPM gets paid within 10 days and hence the receivership should close out shortly after because this is the last major lawsuit that settles everything left at the receivership.
Once the receivership closes, I think safe harbor assets return shortly there after. Thats why I think escrow payment by August 1st is a good possibility.
Clawmann, June 16 is the final probate hearing for DB. If nothing goes wrong, DB as trustee will start distribution process to beneficiaries after June 16. So what ever assets DB has control over in safe harbor could potentially start returning after June 16.
The end is near.
I rather be Lucky and be Served justice!
It takes 3 things for success:
1) Talent
2) Perseverance
3) Luck
Believe me, I have plenty of 1 and 2. But after many years of hard work, for once, I rather just be LUCKY!
I rather be that lucky schmuck for once!
Can June 16 come any faster? 35 days to go...
Did you know that June 16 is a Friday?
Who cares about 75/25 split. Everyone will get paid a very high rate of return regardless of how the split goes.
I just want this waiting to END. Hopefully we'll see the light on June 16 and payment by August 1st.
Let's stop arguing and think positive!!
Positive!
Positive!
Positive!
I am Lucky!
I am Lucky!
I am Lucky!
Can FDIC legally issue waiver for employee claims. Maybe that is why they have delayed the employee claims until next year - hopefully months after our escrow payout?? That way they can quietly pay them out when everyone is gone and no one is looking?
hotmeat, if 75/25 split is all the way then face value or interest should no longer matter for all color of preferred shares.
If 75/25 split is all the way, then whatever comes back should be split accordingly and the preferreds should not be getting interest first. That would imply APR. 75/25 split all the way means no more face or interests for preferred.
Therefore, if 75/25 split is all the way, then all colors of preferreds and common could have shared a single type of escrow marker split in the same way as the 200 million WMIH shares that were distributed 75/25.
It doesnt make any logical sense to keep differet escrow markers if the 75/25 distribution is already predetermined to go all the way.
Goodie, I dont think its anymore confusing than splitting up 200 million shares of WMIH between the preferred and commons. The WMIH share exchange was not one for one with either wamu common shares or preferred shares.
Again, I dont see any logical reason for them to issue different escrow markers for preferred and commons if the final split is 75/25 all the way through. They could have easily split some common pool of escrow markers 75/25 like they did with WMIH shares.
There must be a reason why they are still designating differet escrow markers for common and preferreds. Maybe AZ is right. The APR was only bypassed to issue the WMIH shares and whatever was in WMILT. Maybe the safe harbor assets coming back will still follow APR if WMILT is just a pass through entity. That will make sense on why they have kept different escrow markera for preferred and commons.
I dont know. I wish we could ask someone at the trust to clarify the mechanism for distribution.
Why are there different escrow markers if 75/25 distribution is all the way through? Why didn't they just create one type of marker and then distribute the number of markers to preferred and common shareholders according to the 75/25 split. Why maintain separate markers if the the split is 75/25 all the way through?
Anyone have any logical reasoning behind the maintenance of separate escrow markers?
Azcowboy, when safe harbor assets return, if they dont come through WMILT, how will they return to escrow markers? I thought escrow markers can only receive distribution through WMILT. Is there another pathway that the safe harbor assets can return to escrow markers?
AZCowboy, I'm not very familiar with the case but I thought this was mainly Collyer determining that WMB senior notes do not have a direct interest in the MBS so that they will have to get behind the line after WMI estate for the receivership payout.
Is there certain concern that you have regarding this?
In your opinion, does DB probate exit trigger final resolution of the FDIC receivership? I thought last year settlement settles all remaining suits against the FDIC receivership. Am I missing anything else?
I've always been on this board and the yahoo board from the very beginning. I just never posted.
Payment will not be on June 16. But if June 16 hearing is not delayed, I'm highly confident that distribution will be within 3 months from June 16.
The bad thing about highly speculative bets like wamu is that you would feel wrong everyday for 9 years but it only takes 1 day to feel like you are a hero.
goodie, i agree. safe harbor is not "hidden assets"...but that doesnt mean non-releasing shareholders cannot sue and tie up the case in probate court for years. DB did us a favor by waiting to initiate the probate until December 2016. This case has already settled back in summer 2016 but they sat on it until December to file the probate.
I think they were wauting on the statute of limitation for "hidden asset" to expire in February so to avoid any exposure of lawsuit from delaying the probate process for years. Thats why tgey filed in December so that distribution wont happen until summer - after statute of limitation for "hidden assets" expired.
Safe harbor protects Wamu portfolio from both WMI creditors and FDIC receivership (from exposure to legal disputes like DB-FDIC-JPM over put backs).
Here's a really good overview of how FDIC receivership works. Read from Page 24.
http://www.gibsondunn.com/publications/Documents/092608-Overview-FDICasConvervator-Receiver.pdf
So the way I see it, once DB probate ends, FDIC receivership can finalize with a "loss": $2.7Billion - $600 Million to JPM - $3Billion to DB. It can then say "see we told you so...we have nothing left for WMI" and clean their hands. Receivership closes shop.
Then safe harbor assets can be released once exposure to receivership liability is gone..."surprise, look at all this money... oh we only have a few millions liability left to employee cliams? no problem, let's isolate $100 million for legal fund, and distribute the rest. oh by the way, you can't sue us for hidden assets because the statute of limitation has expired"
June 16 can not come faster.