Due to more research on Section 382, I have amended my thoughts on when a Share For Value Exchange With Escrow ShareMarkers Will Happen
Even though I recently posted about a share exchange event happening simultaneous to the merger, the key in my view are the tax attributes making sure WMIH does not lose them.
After doing further research, when WMIH makes a deal with the Escrow ShareMarker Investors who own the former WaMu Estate, there should NOT be an ownership change due to 5AT (Fifth Amendment Taking), putting the investors back into their original position. This convinces me to change my thoughts on the timing of a "share-for-value exchange" which will be post NSM/WMIH merger finalization. This will make everything much cleaner with less chance for litigation as NSM will be legal history post merger.
With that said, it makes sense that WMIH closes this merger BEFORE making a deal with the Escrow ShareMarkers. Look at it this way - WMIH closes the NSM merger so there will be no issues hanging out there, then WMIH makes a deal with the Escrow ShareMarkers which would be no different than WMIH making a deal with company ABC.
What WMIH would be doing is bringing more value to WMIH, then EscrowMarkers are dealt with, albeit, totally separate from WMIH/NSM merger since this WMIH investment happens post merger closing. I believe this make more sense, even though I was hoping for this to happen much sooner with the Escrow ShareMarkers.
I believe the "share-for-value" exchange still happens in year 2018 at the very latest, if not within a month after the merger closes. I feel the tax attributes are key and WMIH is not going to do anything to jeopardize them. I also believe putting the original investors back to their original positions they held when releases were signed before the deadline to exchange which was around 3/2012 does justice to this chapter 11 reorganization.
So, WMIH has 3.5 billion common shares authorized and ten million preferred shares authorized. WMIH will put the Escrow ShareMarkers back to their original position. So, 1.2 billion common released, WMIH issues NewCo/WMIH common shares (1-1) to these investors and WMIH will also put preferred back to their original position as well. My guess is WMIH issues new preferred with a $1,000.00 Face Value, offer a 10% rate of return annually and the option to exchange into WMIH common when WMIH common reaches say $10.00 a share.
This means everybody is put back to their original position with no harm, no foul and WMIH continues to grow massively into a larger corporation than ever before. I also believe WMIH will be doing business with Fanny and Freddy due to WMIH becoming a Government favored entity in which to do business with unlike prior to seizure.
