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Biz, 3.1A is still missing .. isn't it?
Thanks Epson, ... with current pps this gives a pretty nice PER yearly ratio eh?
Earnings: 50M/quarter (assuming this Q is a trend) = 200M
1,7Bx0,1$= 170M$ ...
you can divide yourself !!
Basically all WMI expenses are attorneys... Any earning consolidater from its subsidiaries is money to the pocket!
Not so bad!!
Curiously: an upgrade to Outperform from an analyst seems to weight less than a comment from a poster in these boards ( this time Bopfan ).
This is the Pinks ecosystem, ... the posters - in a low/medium volume day as today , following a board's comment can influence significantly the pps. Of course with some help from MMs placing their $10 sells at the bid.
Total volume so far today is around $500k, I am sure at least half of it is from guys in these boards following/interpreting a credible poster comment.
It's worth to wonder who is benefing from this shake up, loading cheap shares and who is really behind these strings of MMs micro-orders at the bid.
We may say anything about WAMUQ, but something we cannot say is that it's boring.
I am personally holding my shares waiting for a court decision that will come soon, and/or a settlement news that likely will take longer.
Cheers !!
4B: It seems JPM did not file any answer to WMI motion about the 4B.
As far as I recall today was the deadline, Am I right?
If this is the case then the judge has already everything she needs to rule within weeks ( limit next hearing) on both topics: 4B and Discovery of wrongdoing ( as per Texas action ).
Do I miss something ?
Why Barclays wants to buy WMI shares?
They filed a motion requesting it ( buy, sell, acumulate, etc ) above the 4.x% limit. Since they don't hold now it can only be that they want to buy.
Any guess about why?
I am not sure how to interpret it. Any help?
Cheers and thanks in advance.
Most of us are pretty much aware of the risks involved in a BK stock, Dumb. 99% of cases end up with investors wiped out.
However, time and facts over these months have factored these risk to very reasonable levels.
We, here and now, and you too, know that this is very likely to be the 1% that succeds.
It was always peculiar from the begining. The debt structure ( verylong term and not from suppliers ), the balanced A/L with book value in the assets, the obvious unfairness of the takeover and its price, the 4B$ the lack of the Assets exhibit in the JPM/FDIC PA doc, the Wachovia precedent, the NOL, the court restriction to transfer x% of ownership to protect the NOL, the suites, now we know JPM had commited in written in spring 2008 not to try to takeover WMI without its Boards approval for six months, the >200M commons owned by TPG, etc, etc...
I personally right now:
- Consider out of scope a reorg that wipes out the commons.
- In case of reor...consider possible a dilution. But somehow I thik this dilution is very much factored in current pps levels of commons.
- A buyout/settlement very favorable for commons is possible anyday.
- Even if there is not settelment, if we grasp the 4B, then WMI can get out of BK without any dilution, since it's equiped to keep paying the bonds debt, the bonds interests and the prefs interests for many years from now ( don't forget that the dilution can be forced by prefs/bonds owners only if WMI fails to keep paying what is due annualy).
This would not allow WMI to become a strong bank again, but it would defitively would allow it to storm the bad weather until its assets become more valuable than its book value, until the the suites mature and produce results, until the NOLs can get clarified and become a sure assets, etc..
In summary, .. I think that although its good not to forgett that this is a BK stock, its also true that after so many months of analisys and what has happened until now ... a simple consideration about what is a BK stock is too narrow or shortsighted to value this risk/reward balance.
Anyway thanks for your contribution in the board. I think today's exchanges of rational and good thinking have been one of the best ones ....if not the best ones.
Thanks to everybody for it, I really learned and enjoyed today.
Good luck!!
I do agree!
I think it's 5/14th, not 15th.. I made a typo. Sorry for that.
Good thinking mordicai...
Isn't 5/15th the deadline for JPM to respond to our 4B motion?
If it's so, then I think its worth to add it to your calendar.
If WMI can access these 4B, and/or if JPM response is weak, ..
...then this would impact severely the pps and our perceived ability to build a reorg plan soon and to happily camp around for a long time waiting for the FDIC and the Texas suits to payback.
Just an opinion, ..and anyway many thanks for compiling and posting the list of key dates. I do appreciate it a lot, it's very valuable.
Best wishes.. Penny
Yes, I do.
Today was the deadline for FDIC to respond in Texas court regarding the topic of moving the "Texas Action" to DC.
I guess if they did not file, it will remain in Texas court.
Do I understand it well?
...... from a Yahoo post....>
American National Insurance Co., et al. v. v. JP Morgan Chase & Co., et al.
High level summary is that FDIC intervened at some point (probably before removed to Federal Court). The bad guys (FDIC) are looking to transfer to Federal Court in DC. The good guys filed a response opposing this and a motion to remand (back to state court) on 4/21.
On 4/30, Judge grants FDIC time to respond to the 4/21 filing, with a due date of 5/11.
Specially the "over inflated egos" that have been presented like "heros" these days by the media... at least a couple of them we both are thinking about, Biz, .. on top of the list those named JD and SB.
On the other hand I can imagine Bonderman's ego suffering these days but cooking its revenge....
Good luck Biz..
If they don't object by 13th, and if this is a real legal deadline (maybe there is a legal way to delay this that we don't know about)
... then it could only mean that there are very mature settlement conversations going on right now.
I cannot imagine another reason for this eventual pasivity of JPM while facing an order to get as severely scrutinized as the "Texas Action" describe.
Let's see ... it's getting funny.
Cheers Climber!!
This allegation is really the next move I am waiting for. I just cannot belive that they don't answer that request in due time.
More on the First City case: it seems FDIC settled at $3B
http://www.nytimes.com/1993/12/18/business/first-city-bancorp-in-plan-to-settle-suit-with-fdic.html
First City Bancorp in Plan To Settle Suit With F.D.I.C.
By KATHRYN JONES,
Published: Saturday, December 18, 1993
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LinkedinDiggFacebookMixxMySpaceYahoo! BuzzPermalink The First City Bancorporation of Texas and the Federal Deposit Insurance Corporation reached a tentative settlement of a $3 billion lawsuit today that could return $145 million to creditors and depositors and pave the way for First City to emerge from Chapter 11 bankruptcy protection next year.
First City had sued the F.D.I.C. in September, arguing that the agency had acted arbitrarily by declaring the banking company insolvent in October 1992 and seizing its assets, and that the agency would reap a windfall from the sale of those assets.
The board of the F.D.I.C. said today that it had agreed in principle to the arrangement, which would repay in full all unsecured creditors, including uninsured depositors. In addition, the F.D.I.C. said it would eventually return to First City all surpluses from the liquidation of the 20 First City banks. The banks were closed in January and sold to Texas Commerce Bank, a unit of the Chemical Banking Corporation, and others.
Neither side would put a dollar value on the proposed settlement, but First City officials, in testimony at bankruptcy hearings in Dallas, had estimated that it would take $125 million to pay creditors and $20 million to cover uninsured depositors.
Shareholders could receive further benefits as the F.D.I.C. finishes liquidating the $8 billion in assets it seized when it declared First City insolvent.
Analysts said the settlement was an embarrassment for the F.D.I.C., which was criticized by First City officials when it closed the bank as they were putting the final touches on a $400 million recapitalization plan.
"In hindsight, it looks like the F.D.I.C. acted too hastily," said Frank W. Anderson, an analyst with Stephens Inc. "It's unusual for them to settle so quickly."
But Andrew Porterfield, a spokesman for the F.D.I.C., said the question "is not whether we should have closed the bank or not."
Rather, he said, the First City case was unusual because the F.D.I.C. had sold the First City banks at a $430 million premium above the value of the deposits. "That helped cut our costs a great deal," Mr. Porterfield said. "We think there will not only be no loss to the bank fund, but there will be a surplus."
The proposed settlement, which is subject to a definitive agreement that must be approved by the Federal Bankruptcy Court, would be paid in two stages. After it filed a reorganization plan, First City would receive cash and other assets to bring it out of bankruptcy. And over time, additional cash and assets would be returned to First City after the F.D.I.C. and the company established the size of the surplus from the receivership and liquidation of the 20 First City banks.
First City, which sued the Office of the Comptroller of the Currency and the Texas Banking Commissioner as well as the F.D.I.C., would drop its lawsuits under the settlement.
The ultimate value of the settlement will depend on the prices the F.D.I.C. receives for the First City assets and negotiations between the two sides over the amount of the surpluses in the receiverships. Working Out Disparities
Bob Brown, the president and chief operating officer of First City, said the agreement would allow for a settlement while the two sides worked out their disparities of estimates on the surplus. The settlement will be the "cornerstone" of First City's attempt to emerge from bankruptcy protection, he said.
On Monday, the company will ask the bankruptcy court for an extension for filing a bankruptcy plan. First City said it could emerge from Chapter 11 by the summer.
"It's pretty good news," Mr. Brown said. "Instead of fighting all the time, it will be nice to get on to something positive."
Mr. Brown said he believed that First City might eventually get back into banking or a banking-related business.
Jackson... great finding!!!!!
Many many thanks for your active rol in this board!!
Warm cheers!!
Almost closing and 4% spread!!! (0.095/0.099)
Sadly, we are back in the MMs/Brokers heaven !!
Let's hope it's not a long bump in our road !! The direction is the right one, I am sure ... but damed!! it's so bumpy!!
Good luck to everyone
I understand your point. ...
I am just thinking ... how the perception of what "much money" is has changed since Sept.
Lehman falled because that dammed Sunday Paulson didn't accept to "grant" about 30B in the Barclays bid.
Just some months later we have seen the Govs. all around the globe, injecting ( not just granting ) many tens of billions to banks and companies anywhere.
Public opinion is now comfortable listening Gov.s spending/investing amounts that would have never been acceptable at all.
Overall this new "metrics" in public perception could help us a lot. Nobody would be surprised or upset if somehow the Gov. uses 10 or 20 B to stabilize JPM and FDIC by settling with WMI... These suits are very dangerous .. like a time bomb in the banking system and it's credibility.
... it's business as usual now... x $B to AIG, y $B to GM/Chirsler, z $B to City/BoA/RBS... and now "nx10 $B" to settle this JPM/FDIC/WMI mess.
Who would care at this point?
Incredible how much the whole globe prespective has changed!!
Couple of things, Climber:
1) I am sure by now that commons will not get canceled, the could get somehow diluted in exchange of a portion of outstanding prefs/bonds , but never canceled or severely diluted.
Even if a settlement does not happens ... the owner of the commons are the owners ( this is not an opinion, this is a fact) of the potential rights resulting from the legal actions. And these actions may last long if nothing happens before.
2) Although not as sure as point 1), I am very confident that the pps will not dive below 0.08 ( min 0.07 worst/worst case ). This is an opinion, but I really see that the reward/risk balance has changed a lot from the days when our best hope (buyout left apart) was a fair valuation of current WMI assets.
Cheers and let's bet for your trip to Italy!!
Yeap!! But it maybe requires that the FDIC gets the pot of money from the Congress before they can afford to settle.
I think it was delayed at least 3 months , .. July. However, with so much at stake with these pendding suits ... It souds difficult to value WMI with minimal accuracy. Therefore I would expect a further delay if this does not settle before July.
As a matter of fact, this was precisely the basic argument of the last WMI motion in the BK court: ...
"we request for an urgent discovery related to the Texas action, because if the discovery is positive - so if the Texas action has grounds - .. it would hugely impact the value of WMIs rights and the BK process changing upside down the reorg plan, So please Mrs.Judge .. speed up the discovery so that we can have soon all data needed to finish the reorg plan"
Different wording but this was in the motion. And I guess such a detailed discovery would take a long time - provided JPM does not delay it with counter-motions (most likely).
Cheers Climber !!
cubsfan,.. grey is right.
Somehow, the higher JPM pps goes, the most likely that they can consider a share swap as a mean for a settlement. The higher JPM pps ... lower the dilution that such a buyout would mean for JPM current shareholders..
On the other hand, if JPM pps suffers and just in case it would be because of the bad press and preceived risk generated by WMI clumpsy takeover ... the more urgent for them would be to settle an netralize that perceived risk.
But it seems this topic of WMI scandal is "banned" from main street press. So for the moment I would rather see a high JPM pps.
Cheers.
Me too!! but we may suffer in the mean time. This is still dominated by flippers and MMs, and having lost the 0.1 is a real pity/risk.. it's the perfect environment for MMs: below 0.1 there are large percentage spreads due to the decimal figures limit.
This is easier to manipulate with less money and more % profit for them.
But over time it will recover and I defitively see these 0.5 in the future.
Let's hope so. Good luck!
JPM should answer in the BK court the WMI motion about the "discovery" of the "Texas action". I guess this should happen before the hearing on 20th, so that the judge can value both sides.
I guess we are still waiting for FDIC reply to WMI suit in the other court. I am not sure about the term for this.
Both of them by logic would be a "against WMI" and therefore once they reach the media they could impact pps negatively. Maybe this is what flippers are playing to these days.
Besides these actions I have nothing in the radar until the hearing, and both would be short term bad press for WMI. Maybe I am wrong and there is something else.
...Of course we also have the new law passing the congress filter which in theory would give FDIC enough money to contemplate a positive settlement for us. But I don't think any normal investor would relate this with WMI unless is an "adict poster" like some of us, ...or an insider.
Of course we all have in mind the posibility of a "buyout" or settlement happening at any time any day ( since months ago and possibly for some months from now).
I am still holding tight my shares since fall.. for the long run...
..cheers!!
Quinn Emanuel Goes on Attack in Washington Mutual Case Against JPMorgan Chase ( link below )
By Alison Frankel
May 01, 2009
Quinn Emanuel Urquhart Oliver & Hedges isn't pulling any punches--or wasting any time--in the Delaware federal bankruptcy court suit it filed last Monday against JPMorgan Chase. Just in case it wasn't inflammatory enough to accuse the bank of misappropriating $4 billion that the bankrupt parent company of Washington Mutual Bank had on deposit at WaMu when JPMorgan purchased the savings bank for $1.9 billion, on Friday, Quinn Emanuel filed a motion claiming that JPMorgan engineered a deliberate scheme to undermine WaMu so that it could purchase WaMu's assets on the cheap. Quinn Emanuel represents Washington Mutual, Inc., WaMu's parent company.
The motion asks the bankruptcy court judge to direct JPMorgan Chase to answer interrogatories and submit to depositions so WaMu can investigate the fraud allegations, which were first raised in a Texas state court suit filed by WaMu investors (that case has since been removed to federal court).
The filing ratchets up what's already a bitter showdown between WaMu's former and current parents. The litigation began with a salvo by Washington Mutual Inc., in federal district court in Washington, D.C., challenging the transfer of billions of dollars of WaMu assets to JPMorgan. It continued with a long and aggrieved suit by the bank in Washington Mutual's Chapter 11 proceeding, in which Morgan laid out its heroic efforts to rescue the American banking system by taking WaMu off the FDIC's hands. Morgan sought a declaratory judgment that it, in fact, had acquired the assets claimed by Washington Mutual Inc. in the D.C. suit, including any funds in the "deposit accounts."
JPMorgan Chase is represented in the fight with Washington Mutual Inc. by Sullivan & Cromwell; S&C partner Bruce Clark didn't respond to our request for comment. Washington Mutual declined, through a spokesperson, to comment on the latest filing. Its team at Quinn Emanuel is led by Peter Calamari.
Link:
http://www.law.com/jsp/tal/digestTAL.jsp?id=1202430381255&Quinn_Emanuel_Goes_on_Attack_In_Washington_Mutual_Case_Against_JPMorgan_Chase
REUTERS 8:34pm NY:
(The Reuters journalists signing the report are not in the Discovery Request list)
NEW YORK (Reuters) - Washington Mutual Inc (WAMUQ.PK) on Friday asked a U.S. bankruptcy court to let it probe whether JPMorgan Chase & Co (JPM.N) had unlawfully damaged its former thrift unit's assets in order to buy it "on the cheap," at $1.9 billion, last September.
WaMu, the bankrupt holding company of what was Washington Mutual Bank, filed a motion in U.S. bankruptcy court in Delaware, charging that JPMorgan engaged in "sham negotiations" designed to get confidential information out of WaMu and gain an unfair advantage in buying its assets.
The request cited a federal lawsuit brought by WaMu stakeholders against JPMorgan in Texas in February. The suit claims that in the summer of 2008 JPMorgan leaked false and harmful information from WaMu's financial records, in an attempt to deflate its value and purchase WaMu's assets at a fire-sale price.
A JPMorgan spokeswoman said the firm does not comment on pending litigation.
WaMu's collapse was the largest U.S. bank failure in history. The bank was seized by U.S. regulators on September 25 and its deposits immediately sold to JPMorgan.
The surviving holding company filed for bankruptcy protection in Delaware a day later, with $32.9 billion in assets, including several corporate entities, real estate assets and an insurance business.
WaMu said in court documents that if the claims in the Texas suit turn out to be true, JPMorgan could be held responsible for the "destruction" of the parent company and the "total losses suffered by its creditors and shareholders."
WaMu said it wanted to investigate whether the sale could be classified as a fraudulent transfer, so that WaMu's creditors could get their money back, or whether it could sue JPMorgan for other claims like unfair competition, breach of contract, and misappropriation of confidential information.
WaMu, once the largest U.S. savings and loan, claimed in court documents that JPMorgan had "long coveted" the bank's depositor base.
The request was the second legal action taken by WaMu against JPMorgan this week.
WaMu sued JPMorgan on Tuesday seeking the return of more than $4 billion in cash deposits it lost access to when its bank was sold last year. In that suit WaMu said that JPMorgan wrongfully claims it acquired the deposits as part of the takeover transaction, but that they should have been treated like any other deposit at the bank.
Also last month, WaMu sued the FDIC for more than $13 billion, arguing that JPMorgan paid too little for its bank business and that more money should be available for creditors.
A hearing on WaMu's request to investigate JPMorgan is set for May 20, according to court documents.
(Reporting by Emily Chasan; Additional reporting by Elinor Comlay; Editing by Richard Chang)
What I recall is that the original one was placed in KCC, then removed and then placed again without the confidential piece.
Maybe I missunderstood it, anyway thanks a lot for your reply.
I will try to do some more search.
Cheers.
The doc I am talking about is not available in KCC anymore. If what I I gather is correct, it was removed very fast and replaced by one - the one currently available in KCC - without the confidential piece.
That's why I was looking for the poster who said that had downloaded it.
The posts I am talking about are the ones - posted a couple of days ago in yahoo and here - that mentioned something about "someone at Weil's will be fired" ...
Thanks anyway for your reply.
As soon as I have some more time I will try to finde these posts...
Cheers.
Help! The court doc that was removed?
Does anyone have access/copy of the court doc that was posted in KKC and then was removed within hours?
It seems it is one of our lawyer's billing doc that was posted by mistake and then removed. Apparentyly part of it was labeled as confidential and I picked in some yahoo posts that it included billing items described with the terms "global settlement negotiations" or something similar.
I read a post from someone in this board who managed to download it before it was removed.
In one way or another we should get hold of it.
I would strongly appreciate if someone could help with this.
Beisdes this: ... with bumps on the road - past, and surely future - but we seem to be on the right track, eh?
I am long and holding tightly absolutely all the shares I loaded during the fall's tough days.
Cheers to everyone in the board!!
Climber (& Biz).. there is a 3rd option:
... 3) They present a reorg plan that dilute the commons by converting part of the bonds and/or prefs debt into common equity.
With the suit pendding I don't see that commons can get cancelled. This would mean that the plan drives towards assets liquidation and partial payment of the debt (prefs and bonds). This does not makes sense to me before the outcome of the suit since the level of uncertainty of "WMI assets" makes it impossible for now to settle any liquidation. Who would then own the "rights to benefit from potential outcome of the suite". How can anyone value these rights at this point.
The question if this option 3 is the one they chose is:
What would be the short term impact of this posible dilution in the pps?
--------------
BAD IMPACT: mathematical dilution
On one side, by pure maths the impact of any dilution in pps is squarely negative. To some extent I think this is already factored in the current 5 cents price, so it may not be dramatic.
---------
GOOD IMPACT: viablility confirmed, high risk reduced, getting out of pink soon...
On the other side if there is a viable reorg plan which involves debt owners accepting equity instead of their current rights it would mean that there is not perceived risk of this equity been worthless overtime( long term liquidation and equity cancellation). It would also mean that WMI would emerge from BK with more asssets than debt ( now converted into equity) and can walk again fighting for its rights.
-----------
MODERATE EXPECTATIONS FOR THIS WEEK.
Having said this about this "option 3" my expectation for this week is that they will ask for some more time given the current complexity generated by JPM motion.
I would advise to keep expectations moderate for this week, I hope I am wrong and either a settlement or a reorg plan comes .. but it's not what I expect.
You are right.
It's about time.
And regarring the FDIC mistake .. they somehow even recognized it when they say in public - Sehila Blair on TV -that current legislation does not allow to legally seize banks belonging to large holding corporations ( they avoided the mistake with City, but didn't realize in time with WMB.
Cheers.
You didn't went that much high. It all depends on your time frame.
If you expected to exit within the day or a week, maybe yes. If you can hold longer, then you did not enter too high at all...
... my opinion ...
Roaller coaster.. I posted the message below yesterday late.
At least I felt I needed to write down my plan and vision before being dragged by the heat of the future days/weeks/months that we have ahead...
Today's moves seems to me that this has just started. I will be tough to hold.
Good luck to all.
-----
GAME PLAN: Keeping cool during the rush/turmoil.
CONCLUSION: MY GAME PLAN
(Rational below)
I am holding long most of my shares (prefs and commons) - at least until WMI gets out of BK in summer. In the mean time I would recover my initial investmet if commons rise around $1 and keep the rest for the future.
------------ RATIONAL --------
I guess everyone has to make its own decision about when to exit.
Here I share what I will try to keep in my brain during next days rush:
1.- Liquidation / commons getting wiped out is out of scope.
The fear days when the risk was high are over. This has always been a peculiar case in which the creditors are - all of them - long term ones ( up to 2049 and less than $1B due in 2009) and in which the debtor has plenty of cash to support due payments - interests of prefs included - as well as legal fees.
Under these circumstances debtors cannot force a liquidation in BK court and they are not even interested in trying it since their long term expectation is more likely to be fullfilled by exiting BK without liquidation.
On the other hand the possible dilution by prefs. conversion into commons may be less attractive to prefs. owners given the circumstances and we do have mayor players holding commons - TPG the 1st in the row - who are not at all interested in this and will resist. Please bear in mind that as soon as WMI gets out of BK ( June/july) it will be able to pay the very juicious interests rates- compared to current market rates - without any problem.
My conclusion: no risk for liquidation and very unlikely dilution.
2.- I see 3 processes in paralel:
2.1 - BK and SOA evolution
Here the BK court dates are key. Let's see what JPM claims by March 30rd.
The evolution of the "undetermined value" ( which now counts zero $ as assets ) of many WMI assets included in the current SOA may by itself make the Assets/Liabilities ratio become above positive for us.
As discussed in may posts over the last months: due to accounting rules for "valued" assets and due to many "undetermided, not valued assets" the assets valuation can only evolve positively. Butthe liabilities are known and fixed ( the original $7.xB).
The 4.4B cash can anyday get cleared for WMI at the BK court. And we still have to see if the 1.9 B paid by JPM to FDIC can be hold by FDIC forever or the BK court may force them to hand it to JPM. Now that the "bad debt" will be taken care of by the goverment, FDIC cannot argue anymore that they need the 1.9B to cover any losses from the WMB's bad debt excluded of the transfer to JPM.
Besides these "assets" game, the most important event is the exit from BK planned by 3rd Q. Whatever happens to the evolution of the other processes (points 2.2 and 2.3 below) this will have a great impact in the pps evolution. This will not happen next week but over the next 4 months. This will enable institutional funds and players to invest again in a stock that is not anymore "pink" or in BK. It would allow the ratings agencies to upgrade the recomendations, etc. If the outlook of the rest of events is good, then serious investors can jump again into the game.
2.2 - FC court
In my opinion this will have 3 impacts:
*Short term: pr coverage, clear and obvious improvement in this new risk/reward outlook and radical short term impact in pps
*Medium term: the political/social embarrasment that this can create as well as the negative impact in JPM outlook may trigger the need for a buyout (point 2.3 below)
*Long term: if the FC case is as solid as many of us think ( I came to trust Bopfan) , then the long term reward - years and tens of $B - is huge. For those who can wait so long , this is the real game.
2.3 - Possible take over / buyout
By today it's clear that it's almost impossible to split the holding and the banking operations in these corporations. It was expressed clearly by Sheila Blair with the City case. It was clearly the reason for the "missing/unexisting asset's exhibit" of the Purchase Agreement between JPM and FDIC. It is clear in the difficultities of JPM - who asked for a delay that was denied - to present its claims in the BK court before March 30rd.
JPM bough something uncomplete. With the current press coverage and under Sarbabex--Oxely legislation this uncertainty must be reported and it will damage severely their reporting to SEC and analists. Very likely FDIC sold to JPM more that it could legally seize and transfer. This will become public knowledge around the FC press coverage.
For many of us it seems that the only way for JPM to get the original takeover complete is to settle with WMI. For many of us - specially with curren press coverage - it's clear that the only way for FDIC to get out of this mess is to facilitate or promote a settlement.
With the current goverment mood and support, JPM can increase capital and exchange JPM shares by WMI shares at a exchange rate acceptable for TPG and the rest of key shareholders. Prefs and bond holders would get JPM in charge of paying the debt and JPM would access asap 4.4 B cash plus the rest of WMI's assets.
In summary I still think there are more reasons than before for a buyout.
In case of buyout by JPM , we don't need to worry about the prefs.
I guess part of the negotiation will be around this, but be sure this cannot be settled without taking very good care of the prefs. Either by the buyer assuming in full the duties of WMI, or by an exchange with a very fair ratio.
Very good analisys of the JPM/FDIC trap !!
None can go around selling/buying something that the seller has not total right to sell without expecting future problems.
Good explanation of the trap these two got themselves into.
GAME PLAN: Keeping cool during the rush/turmoil.
CONCLUSION: MY GAME PLAN
(Rational below)
I am holding long most of my shares (prefs and commons) - at least until WMI gets out of BK in summer. In the mean time I would recover my initial investmet if commons rise around $1 and keep the rest for the future.
------------ RATIONAL --------
I guess everyone has to make its own decision about when to exit.
Here I share what I will try to keep in my brain during next days rush:
1.- Liquidation / commons getting wiped out is out of scope.
The fear days when the risk was high are over. This has always been a peculiar case in which the creditors are - all of them - long term ones ( up to 2049 and less than $1B due in 2009) and in which the debtor has plenty of cash to support due payments - interests of prefs included - as well as legal fees.
Under these circumstances debtors cannot force a liquidation in BK court and they are not even interested in trying it since their long term expectation is more likely to be fullfilled by exiting BK without liquidation.
On the other hand the possible dilution by prefs. conversion into commons may be less attractive to prefs. owners given the circumstances and we do have mayor players holding commons - TPG the 1st in the row - who are not at all interested in this and will resist. Please bear in mind that as soon as WMI gets out of BK ( June/july) it will be able to pay the very juicious interests rates- compared to current market rates - without any problem.
My conclusion: no risk for liquidation and very unlikely dilution.
2.- I see 3 processes in paralel:
2.1 - BK and SOA evolution
Here the BK court dates are key. Let's see what JPM claims by March 30rd.
The evolution of the "undetermined value" ( which now counts zero $ as assets ) of many WMI assets included in the current SOA may by itself make the Assets/Liabilities ratio become above positive for us.
As discussed in may posts over the last months: due to accounting rules for "valued" assets and due to many "undetermided, not valued assets" the assets valuation can only evolve positively. Butthe liabilities are known and fixed ( the original $7.xB).
The 4.4B cash can anyday get cleared for WMI at the BK court. And we still have to see if the 1.9 B paid by JPM to FDIC can be hold by FDIC forever or the BK court may force them to hand it to JPM. Now that the "bad debt" will be taken care of by the goverment, FDIC cannot argue anymore that they need the 1.9B to cover any losses from the WMB's bad debt excluded of the transfer to JPM.
Besides these "assets" game, the most important event is the exit from BK planned by 3rd Q. Whatever happens to the evolution of the other processes (points 2.2 and 2.3 below) this will have a great impact in the pps evolution. This will not happen next week but over the next 4 months. This will enable institutional funds and players to invest again in a stock that is not anymore "pink" or in BK. It would allow the ratings agencies to upgrade the recomendations, etc. If the outlook of the rest of events is good, then serious investors can jump again into the game.
2.2 - FC court
In my opinion this will have 3 impacts:
*Short term: pr coverage, clear and obvious improvement in this new risk/reward outlook and radical short term impact in pps
*Medium term: the political/social embarrasment that this can create as well as the negative impact in JPM outlook may trigger the need for a buyout (point 2.3 below)
*Long term: if the FC case is as solid as many of us think ( I came to trust Bopfan) , then the long term reward - years and tens of $B - is huge. For those who can wait so long , this is the real game.
2.3 - Possible take over / buyout
By today it's clear that it's almost impossible to split the holding and the banking operations in these corporations. It was expressed clearly by Sheila Blair with the City case. It was clearly the reason for the "missing/unexisting asset's exhibit" of the Purchase Agreement between JPM and FDIC. It is clear in the difficultities of JPM - who asked for a delay that was denied - to present its claims in the BK court before March 30rd.
JPM bough something uncomplete. With the current press coverage and under Sarbabex--Oxely legislation this uncertainty must be reported and it will damage severely their reporting to SEC and analists. Very likely FDIC sold to JPM more that it could legally seize and transfer. This will become public knowledge around the FC press coverage.
For many of us it seems that the only way for JPM to get the original takeover complete is to settle with WMI. For many of us - specially with curren press coverage - it's clear that the only way for FDIC to get out of this mess is to facilitate or promote a settlement.
With the current goverment mood and support, JPM can increase capital and exchange JPM shares by WMI shares at a exchange rate acceptable for TPG and the rest of key shareholders. Prefs and bond holders would get JPM in charge of paying the debt and JPM would access asap 4.4 B cash plus the rest of WMI's assets.
In summary I still think there are more reasons than before for a buyout.
The reckless, irresponsible seizure of Washington Mutual: please read in Washington DC
http://brontecapital.blogspot.com/2008/09/reckless-irresponsible-seizure-of.html
I just find this link. Strange that we did not detected it - not that I recall - for so long. It was writen on Sept. 28th. There is a good brain behind it.
I wonder what this guy - John Hempton - could produce if he works together with Bopfan.
Cheers !!
the link to Reuters...
http://www.reuters.com/article/marketsNews/idINN2153132120090321?rpc=44
REUTERS: Washington Mutual sues FDIC for over $13 billion
Washington Mutual sues FDIC for over $13 billion
It's also linked at Yahoo Finance (wamuq.pk)
"... no comment from FDIC spokesman .."
Finally it's breaking through !!
Cheers.