Friday, January 09, 2015 7:10:40 PM
...to understand the caution that are expressed for potential events down the road. The 382 posts evidence really good time spend researching and understanding the ins and outs of what went on and what is going on. It is appreciated.
It is time for looking ahead on new understandings. IMO.
I disagree, based on Delaware jurisdiction and corporate governance laws and regulations.
I believe, like 382, that such understanding should move to a couple of new aspects; specifically Delaware law dealing with minority shareholder rights in the areas of appraisal rights and valuation and for entities on a national exchange with 2,000 or more shareholders. I'm not going to cite the specific sections for mergers, freeze outs, etc. as there are many. But, generally, it is important to understand the 'potential of the situation that minority shareholders could be in if the "trust" is misplaced by us.
We are to reincorporate in Delaware, and there are many ways to accomplish such.
We are to attempt to uplist (may or may not be associated with the reincorporation).
These could be new positives for us. And, considering who owns the voting control and the extent therein, it is simply prudent to keep a skeptical eye on the cautions that might also factor in.
Other than that, a couple of side comments ~
1. I don't believe this is accurate, just my opinion. The earlier POR's in which such was the 'plan were defeated in the 7th amended. Further, the POR has no legal or civil, management or governance over WMIH. Once reorganized, in accordance with the POR, it is IMO simply not bound by reference quoted above. I'd be open to looking at it if you could point it out in the 7th amended, confirmed.
2. On this matter, there is mathematical analysis to be done. Whether it is a merger (one or two step), as part of reincorporation or after, a reverse split, etc. (there are many methods), WMIH only has to assure that KKR (once they become a 5% holder), Tepper and Greywolf do not increase by 50% or more 'from their lowest holdings (as a 5%er) during any 3-year period. So, mathematically, with the stock ownership record of the players, certain methods can be undertaken to reduce the number of shareholders significantly and not encroach of the 50% limitation and risk the NOLs. "Compensation" to minority shareholders 'cashed out may or may not be subject to the Delaware appraisal rights laws and regulations. There are multiple levels of alternate valuation methods; WMIH decides, dessenters can litigate. The problem with any valuation is what to do with intangible assets (in our instance, deferred tax assets; the amount of the NOLs times the tax rate for the amount estimated to be used). Currently, this amount is $-0-, as per the footnotes, the NOLs times the tax rate is fully "reserved" at this time. So, with little case history anywhere, what is the value of NOLs that are valued at $-0- for audit, tax and SEC reporting purposes? We both believe that it is huge, who will present such to the court in a challenge? We've been down this road in bankruptcy and even had to force the retention of BDO to at least 'argue it.
So, IMO, they really can do it. However, I'm sitting on my hands until the merger/acquisition announcement and execution as one would presume that the PPS would be favorably rewarded. Then I will take a cold look at what the scene looks like.
Take care.
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