Mr Cooper Group Inc (COOP)

[bkshadow]

Well, I see but I simply disagree...

...for the reasons stated in the previous post and supplemented by the comments below.

...comments in blue.

...end of comments.

fsshon Friday, 09/18/15 04:21:05 PM
Re: bkshadow post# 435415
Post #435460of 435460

In my last post, I laid out the Legal Language that affects the "controlled group" (CG) and "controlled corp (CC) in terms of the 6 Billion NOL.

Now, it all comes down to math.

As I said before the CG currently has plus 50% control of WMIH.

...the "control group" has 68% potential control (the warrants are not exercised).

...the IRC 382 concern is an increase, in the aggregate, by value, of 5% or greater holders "IRC 382 change of control measurement group."

...the "control group" consists of those that in the IRC 382 5% "change of control measurement group" and "others that are not" (for example, the Texas Teachers Pension is one in the Citi group, but I would have to double check that in the SEC filing).

...so, going forward in the discussion there are two separate groups for two different purposes.

In terms of KKR, even though they currently own "no equity in WMIH"

...KKR was issued the Series A preferreds for $11M.

...they are 'voting preferreds.

...they count as equity for IRC 382 change of control measurement group," but not until the Series B preferreds were issued.

...the Series A preferreds were under 5% by value of the post-issuance total equity of WMIH and they did not become a 5% or greater on that issuance alone.

...accordingly, they never filed with the SEC as such until the Series B preferreds were issued.

they are considered an owner by the IRS because of the stock warrants (71.4M) they possess and for income tax purposes, the IRS deems them an owner of stock in WMIH.

...as constructed, the two sets of Warrants that KKR was provided as part of the capitalization package / deal "did not, nor currently do not" qualify as being deemed exercised.

...a pretty decent article is linked for this.

http://www.thetaxadviser.com/issues/2014/sep/tax-clinic-01.html


...IMO, the rest is "moot" per the above.

SO if KKR owns 71.4M of WMIH and 200M in Preferred stock redeemable for another 88M in stock of WMIH on a "Qualified Acquistion" (QA), then the CG has to receive stock to counter-balance the KKR ownership. KKR wants to invest up to 1 Billion in WMIH in the next 2 years plus own up to 42.5 of stock. We are A/S at
3.5B now
3.5 x 42.5= 1.48b SHARES.

I think it was 185M that made up the CG. (correct me if I am wrong)

185/201= 92.5% is the CG.

This CG has to keep 50.1% control of WMIH.

If all stock is O/S this equals 1.75B

Let's say WMIH only issues 50% of the stock.
That means the CG has to possess 876M shares of WMIH.
We currently posses 185 + (new 5M escrow given to us) = 190M shares

It has to be this way, if you want to keep the NOL.

If the Preferreds and the warrants are redeemed when WMIH makes a QA, (it's the only way to use the escrow money), that is 225M to 71M = 296M we have to keep KKR at or below 42.5. Why?

Because of this... 185/201= 92.5% is the CG.

When you look at the math, the 42.5% counters the CG at 50.1 and the shareholders outside the CG.

No matter how it shakes out, the CG has to maintain 50.1% control of WMIH

296M is over the current 201 and the 190M (CG)

190/296=64%
that means we have to at least go to 296 X 144% = 426M has to be owned by the CG.

We currently have 190.

426/190= 2.25
Each shareholder in the CTG would need to be issued 2.25 shares to keep the CTG in control of WMIH. If the Preferred and warrants were redeemed for equity.

this would push the O/S to

426 (CG) +190 (current CG) +296 (Pref,Warrants KKR/CITI, etc) 15M (outside CG)= 927M

CG would then own 426+190=616
616/927=66% of WMIH.

KKR would be on their way to 42.5, they would own 71.4M to 88M = 160M shares
160/927= 16.5%

This leaves room for WMIH to do this 2 more times, if WMIH wants to protect the NOL.

There really is no way to protect the NOL and not issue shares to the CG. I challenge anyone on here, to prove me wrong on this. Play with the math all you want, change the figures, you still have to keep the CG in control.

Cheers
GO DUCKS!
~Don~

...Don, I really appreciate being able to have posts like this. I disagree, but it is certainly beneficial to see others researching these matters and focusing on WMIH.

...again, respectfully.