Mr Cooper Group Inc (COOP)

[Large Green]

Tax Requirement a MUST for Closing Merger – No Ownership Change – Proof Shares MUST BE ISSUED According to Merger Filing Document


PLEASE NOTE: This is my interpretation and could be totally wrong


• Section 382 is very strict concerning an ownership change and 51% ownership by >5% holders since 3/19/2012 MUST be maintained to prevent ownership change that would negate NOLs

• Last ownership change was 3/19/2012 know as the Effective Date

• Tax advisor (BOD) does not anticipate an ownership change with WMIH/NSM closing merger

• If I get IRS Section 382 correctly, there MUST be shares issued to avoid ownership change

• Effective with ownership change on 3/19/2012, all former preferred/common converted in total to 206 million NewCo/WMIH shares outstanding

• Of this 206 million NewCo/WMIH shares, 150 million were attributed tor both former preferred (WAMPQ & WAMKQ) and 50 million were attributed to old common shares

• Roughly speaking and not including NewCo/WMIH owners, there will be about 1 billion shares outstanding on merger closing

• I believe there will have to be a 6 to 1 forward multiple for the 50 million NewCo/WMIH shares issues to Escrow ShareMarker holders bring the total to 300 million

• I believe former preferred will be issued a new preferred offering for the 150 million NewCo outstanding plus a 2 to 1 forward exchange bringing the total to 300 million NewCo/WMIH outstanding

• Add in the total of 300 million NewCo WMIH shares issued to common and 300 million issued to preferred bring the total to 600

• So, at merger closing there will be a total of around 1.6 billion shares outstanding in order to prevent an ownership change

• So, before closing I would expect we would have to have a filing discussing the extra share issue to those who signed timely releases and have Escrow ShareMarkers in their accounts

• I have a link to the merger documents below and highlighted what WMIH MUST have a merger closing and note they have discussed IRS Code Section 382

• WMIH discusses “Other Transactions” when discussing section 382 that I believe is forthcoming before merger closing – As always time and filings will show us the way


Section 8 Tax Opinion Page 71/72

https://www.sec.gov/Archives/edgar/data/933136/000119312518045989/d539539dex21.htm

(d) Tax Opinion. The Company shall have received a copy of a written opinion of BDO (“Parent’s Tax Advisor”), dated as of the Closing Date, in form and substance reasonably satisfactory to the Company, to the effect that (based on the most current information available prior to the Closing Date as provided by Parent to BDO and subject to customary assumptions and qualifications) (i) there should not have been an Ownership Change since March 19, 2012, and (ii) the Merger, taken together with the other transactions contemplated by this Agreement and occurring on the Closing Date, should not result in an Ownership Change (the “382 Tax Opinion”). In rendering the 382 Tax Opinion, Parent’s Tax Advisor shall be entitled to receive and rely upon tax representation letters, including from Parent.

****MORE on IRS Section 382***

http://media.straffordpub.com/products/section-382-limits-on-nol-usage-following-an-ownership-change-2011-09-21/presentation.pdf

Sec. 382 Basics

• Limits a Limits a loss corporation “loss corporation”
• That undergoes an “ownership change”
? An ownership change occurs if immediately after an
owner shift or an equity structure shift; the percentage
by value of stock of the loss corporation owned by one or
more 5 % shareholders has increased by more than 50
percentage points over the lowest percentage ownership
of such shareholders.
• During a three During a three-year testing period “testing period”
• From utilizing “pre-change losses” or other tax attributes
• Against “post-change” income