Fannie Mae (FNMA)

[kthomp19]

in an ipo, if jr pfd agree to convert at a par valuation into an ipo.

if the ipo price is $12.50, a $25 par value gets 2 shares.

I get that, but why on earth would a junior pref holder agree to this ratio? They would want the lowest IPO price possible. So would new buyers of common shares.

As discussed earlier on this board, isn't it pretty hard to do an IPO (well, a secondary offering) above the current market price? Especially 10+ times that amount?

10:1 scenario is preferred convert to common now.

More like 9:1 for the $50 pars (on a weighted basis), but yeah in the right ballpark. Why would juniors accept any less than this?

part of the common having any upside at all is preferred getting par conversion rates... so really you're betting on:

1. moelis/blackstone/paulson/trump/mnuchin bros
2. lawsuit settlement only if preferred get par or par plus

Exactly. Group 2 will want the most favorable terms they can manage and it doesn't matter if commons get screwed. $$$ > $$ after all.

if you are raising $120B.. what is the value of the two companies?

if the value is $200B. $200-$34-$120 =$46M for existing warrant diluted common. or $5.11/share

You have an $80B difference between final market cap and the amount to raise, but Moelis has a much higher difference (almost $200B). Why is that?

Also, if you raise $120B out of $200B, there are leftovers of $80B, 80% of which belongs to Treasury. That leaves $16B for the current commons and juniors. If the juniors get any sort of favorable ratio what's left is less than half of that, leading to a maximum of around $4 a share.