LOGICAL and IllOGICAL perspectives on a S4V or cash buy off of the K preferred markers
ILLOGICAL PERSPECTIVE
20,000,000 were issued face value $25 for a total of $500,000,00, then you ad FJR @ 1.79% works out to 8.9 mill per year or 89mill for 10 yrs added together you get a grand total of ("""CASH NEEDED ) to pay them off $589,000,000..........OUT of POCKET lost forever, lots of money POOF GHONDI
Logical
20,000,000 K preferd are S4V swapped at their respective ratio to P of 40/1, meaning 500,000 $1,000 face P's exchanged in total. NO CASH SPENT or 586 mill saved!!!!!!!!!!!!!!!!!
Now on 500,000 P's at the old rate of 7.75 each P was paid $75 a year and that times 500,000 is $37,500,00 IN TOTAL to cover the NEW RE-ISSUANCE of the 500,000 P for all the old K's, AND saves the $598 mill cash in WMIH's coffers.
Now if one was to take the $589,000,000 and put it in a decent interest bearing entity you could conceivably get say 4%, remember we ARE GOING INTO THE MORTGAGE LENDING BUSINESS HERE RIGHT,so loan out OUR own $589 MILLION and get $23,560,000 million each and every yr for on the avg 15 yrs, WHILE NEVER LOSING YOUR PRINCIPLE.
So actually out of POCKET that it would take to Pay those P's their interest due yearly would be about 13 mill BUT BUT BUT you preserved the $580 mill.
AND when you CONSIDER the 580 MILL would probably be LEVERAGED some 10 timex and loaned out YOUR NUMBERS grow exponentially considering at a 10 X leverage the $580 mill would become $5.8 BILL and getting 4% on the mortgages of $5.8 bill would be $232,000,000 per year for 15 yrs or $3.4 BILL over all
BUT still again YOU preserved your 580 BY NOT BUYING OUT K's which in turn allows you leverage to 5.8BILL and make in 15 yrs $3.4 bill by doing so........................ Make 6 X's what you were going to spend.
So by retaining and lending out that money you make the 580 Mill in 3 yrs
So you decide the LOGICAL or the ILLOGICAL choice here
I know MY CHOICE USE our money to MAKE MONEY not throw it to the wind
CASH IS KING ALWAYS and co's use stock not CASH!!!!!!!!!!!
