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Listing costs, employee share based compensation, and share based compensation for acquisitions will go down. EPS will be better.
But MMOG has been a disaster as transition to phones speeds up.
If they make progress on MOLpay, MOLwallet, and use of MMOG for phones, they have a shot.
But I can see a scenario where the shift happens so fast that MOL becomes a dinosaur very quickly. They need to show they can make this transition to credit and debit world.
From 20-F:
More problems found at Nganluong, Vietnamese sub. No restatement. Accounting upgrade across the company in the works.
Share-based compensation will go down: "On March 18, 2015, a board resolution has been passed by the Company to suspend the “General Employees Share Option Plan” (Plus, decline in acquisitions)
Molpay volume up 100%. Molwallet coming online.
LOL! Geez, I feel like the new kid in class who everyone blames for shooting spitballs at the teacher...
...if only someone could just tell me if they think "satisfied-in-full" creditors can also get shares up to the allowed claim...I would think not.
And, yeah, not selling.
Cheers, everyone
Guys, I am just a newbie investor asking questions. I own CTs as a lottery ticket and wondering how much of a lottery ticket it is.
I get the sense that things are a bit weird here between folks on different sides of this but, please, trust me, I am just a newbie asking questions.
Thanks and sorry for the confusion. -Key
If a creditor is satisfied-in-full, will they also get shares in the successor company (assuming such a company is envisioned)?
Stockbum, I've read most of the key posters' messages going back to 2012. Thousands of posts. Hestheman, Toogood, you, and others along with the rest of the material. I've read Joe Stocks, too.
This comes does to the successor obligor provisions of the CT contract and the value of the newco, I think.
CTs lose if all shares in newco go to higher classes. There is room in the POR to say that will be the outcome. Read on distribution of shares in POR. CTs win if there is a broader distribution of shares. Successor obligor provisions of CT suggest that might happen. But does anyone have any other reasons?
Stockbum, Funny, no! Maybe a similar way of thinking about things, though. I am just looking at this from every angle. Isn't that what we are supposed to do?
BTW, I am long CTs, certainly a much smaller stake than most here but meaningful enough to keep asking questions!
Joe,
I think the CT holder's angle is not so much payment as it is the simple survival of the claim and, because of it, shares in any successor company. The claim simply survives, and because it survives, it must be dealt with.
Reading your posts, I get the impression that you do not think that there will be a successor company.
As always, thanks. -K
Joe, Thanks.
A holder of the CT would have to believe that the terms of the CT make things a little more complicated.
A holder of CTs would have to believe that the plain language on p. 21 of the Prospectus is significant. “The guarantee will not be discharged except by payment of the guarantee payments in full to the extent not paid by the trust or upon distribution of the junior subordinated debt securities to the holders of the preferred securities in exchange for all such preferred securities.”
If the guarantee were to be upheld, what would happen?
Grateful as always, Key
Joe,
Once again, thanks.
On the Board, it has been argued by a few people that, by virtue of the prospectus, the CTs can survive the BK. It seems that this would be as affirmed debt. If so, although they are junior, they do not go away. But, instead, continue to accumulate, albeit, without an ability or right to pay, etc, etc...as you point out.
It has also been observed that this "plain language" reading of the Prospectus has been upheld by Peck on the Citi CTs (which were subsequently redeemed). Of course, this was not in the context of Ch. 11. The point here is not that it compels the full redemption of the CTs, which is not possible, but only that the the "plain language" of the prospectus has been upheld.
So,what do you think will be the outcome? The CTs are dismissed as worthless by the BK judge at a certain point? They are dismissed as debt and thrown into the OBS, where they turn out worthless? They survive as worthless in reality although "affirmed' in principle? An offer to CT holders is made?
Or perhaps some other outcome?
Thanks -Key
Thanks, Joe.
What is your assessment of the prospectus?
Several here believe that the non-discharge clause has a chance of surviving and the core of the bet lies there. Does not seem like a TRUPs has been here before, though.
To start, read the stickies and read the prospectus. Read the posts of hestheman, toogoodfella, littledevil90210, wayne49, cotton and others (sorry if I miss some worthy mentions) making good responses to them. You'll need to go back to 2012, 2013 at least). Joestocks takes the other side. GL!
Cotton, can you gloss this a bit for us. Thanks! -Key
Yes.
Accordingly, Dick writes, "it would violate fundamental principles of tax law to distribute a corporate debtor’s tax attributes directly to parties in bankruptcy. But because the tax laws allow indirect transfers of the debtor’s tax attributes in Chapter 11, they essentially permit these
valuable assets to be beneficially distributed to parties in bankruptcy via the debtor’s equity security interests." p. 2300.
The distinction here is between the non-transferability of the tax attribute and the distribution of the debtor's equity security interest.
These are two different things.
The tax asset belongs to LBHI and the real owner of LBHI is the persons to whom the equity interest is distributed.
Thanks Fritz!
It's all in that little "and" for us!
From my reading of Prof. Dick, I get that there is no formula, no rule for the mix between old equity and creditors. She gives a couple of examples where old equity was not included. Another however, WaMu, where she thinks old equity got too much. She says, "and/or."
Her agenda is that she thinks the law should include rules for distribution of tax assets but currently this is not the case. How this effects us, I don't know. Obviously, we only care if the CTs will get paid. My take-away is that there is no iron-clad rule that says, "to preserve NOLs, you must include old equity."
Take a look: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2420148
Bests, Key
Camaro,
Thanks.
The view that shares will be given out according to the POR is a significantly weaker investment thesis than the view that the equity MUST be included in newco in order to preserve the NOLs.
It is at least possible that the CT owners could watch the shares get handed out to higher classes as we have with the cash thus far. Not saying that this is more or less likely or probable, just possible.
GLTA, Key
Wayne, Take a look at: Diane Lourdes Dick, Bankruptcy’s Corporate Tax Loophole, 82 Fordham L. Rev. 2273 (2014).
There is no necessary retention of the shareholders’s equity interest in the restructured company in order to preserve NOLs. There is nothing in 382 that guarantees anything to old equity. The change of control rule means it has to be old equity AND/OR creditors. Although in the case of WMIH, old equity did indeed receive 51%, there are other cases (for instance, PMI Group), where the debtor’s equity security interests were cancelled and new common stock was issued to creditors in exchange for their debt claim.
Instead, the real problem turns more on a gap between tax and bk law that leaves the deferred tax assets in an ambiguous place. I can’t say if this problem is accounted for in the LBHI POR, though, FWIW, it does say that the issuance of shares will be according to the POR.
Thanks!
Wayne, Thanks for these remarks.
It is this exception that I am curious about. In principle, it could be 99.9% for creditors, given the exception. But, if I understand you correctly, you believe that the equity is likely to fare much better.
From what I gather, LD holds that the equity must retain 51% whereas, you, under the exception rule and looking at case studies (WMIH?), think that equity will get less.
Point well taken about the hybrid nature of CTs.
Again, thanks!
Thanks for your message, Joe.
Let's leave aside the whole COD question and focus on change of ownership. In bankruptcy, 382 seems to be slightly different. I could be wrong but it does not seem to guarantee shareholders any particular % of the company. Instead, it is the shareholders and the creditors together who must retain 51% in any merger after exiting BK.
I am surely missing something but I do not see where it says that the creditors can't own 100% of the new company. This would not count as "change of ownership" in a BK. Later, the new company might give up no more than 49% in post-BK mergers to take advantage of NOLs. That's where the change of ownership rule would come into play.
What am I missing?
Wayne49,
I am trying to understand the basis for the necessary inclusion of the OBS in the new company.
I may be reading it wrong but it seems that Section 382 of the code makes an exception for a change of control in bankruptcy. Is that not the point of the oft noted PLR 201306007?
Given PLR 201306007, what is the basis of the belief that the OBS must get shares?
Many thanks!
Stoxjock,
Could you explain why you believe that Section 382 entitles shareholders to any particular percentage, indeed, any shares at all?
Is not the rule in BK slightly different, with "ownership" meaning shareholders and/or "qualified" creditors of the corporation within a certain testing period? In other words, is it not the shareholders and/or creditors that must maintain the 50.1% control? Could not that entire 50.1% go to the creditors?
I do not see where in 382 shareholders are required to retain any percentage of the new company or that they must be awarded shares to preserve NOLs.
Thanks and best wishes!