Mr Cooper Group Inc fka COOP

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LP, here is an excellent, factual, detailed explanation by former WithCatz in late year 2012 to Ron explaining the 75/25 origination and then implemented in this case and is exactly on point from my knowledge of case and documents

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Re: Hidden in Plain Sight
« Reply #57 on: November 21, 2012, 06:04:13 AM »
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Quote from: ron_66271 on November 21, 2012, 02:58:59 AM

This is a payout schedule to include both the preferred and commons classes. Preferred does NOT need to be payed in full as commons are being payed also. Hence 75/25.

The pay out is split 75/25 until preferred is payed in full. Preferred has a face value and is caped out at the face value!

Enjoy.

Incorrect.

Irrespective to my feelings about the validity of the hypothetical.....

The ongoing 75/25 split has two conceptual parts....

1) It allowed commons to immediately share in the post-bankruptcy distributions of WMIH shares, and receive any future distributions into the Escrow Shares (LTIs) -- both in 75/25 ratio. This was done by the court 'allowing' a removal of the Absolute Priority Rule -- which is allowed, when there is a vote by all affected class members to support it.

2) But, because the APR was agreed to be removed, it now remains a perpetual 75/25 split -- effectively meaning there is no longer a 'cap' conceptually on former preferreds.

You can't get one without the other.

Said another way -- If a 'cap' on former preferreds was to be maintained, then there could not be a 75/25 split to allow commons to have shared immediately in post-bankruptcy WMIH shares, etc... Eg, commons would have gotten 0% of WMIH shares. And Escrow Shares would also be compensated 100% to former preferreds until face, and then to former commons...

The effects of the 75/25 split have been discussed exhaustively, including confirmation from former EC people and the WMILT that the 'cap' was removed in exchange for the 75/25 split.
« Last Edit: November 21, 2012, 06:44:01 AM by WithCatz