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Tuesday, June 11, 2019 9:08:37 PM
It's hard to answer your first question without being more specific about what ownership means. The government currently has 100% of the common shares' voting rights, 0% of the actual common shares with the option to purchase enough to give them a 79.9% stake for a pittance, 0% of the junior preferred shares, 100% of the senior preferred shares, and a right to 100% of FnF's profits each quarter. The last two of these cannot continue if FnF are to ever recapitalize, so I expect either the Fifth Circuit or FHFA and Treasury themselves to remedy those.
Currently I would say that FnF are 100% state-owned, state-controlled, and run due to FHFA's powers as conservator and the NWS. This must change in order for a share offering to proceed, though. The last two of these cannot continue if FnF are to ever recapitalize, so I expect either the Fifth Circuit or FHFA and Treasury themselves to remedy those.
Ownership here means actual majority ownership of the publicly traded common shares with voting rights with the Federal government having the company on its books and being in direct control of its operations. The Brazilian Federal government owns Petrobas in this way. Is Fannie Mae and Freddie MAc on the books of the US Government?
As for the second question, I think "at" is likely and "after" is highly unlikely. FHFA and Treasury will want control over the recap process, meaning that they would prefer it to happen before release. The new buyers want the opposite; they won't buy shares that have no voting rights. I expect release to happen in conjunction with recap for that reason. I also don't think it will be possible to do multiple share offerings because it will be too difficult to draw in enough money for the first one when they don't know how much subsequent offerings would dilute them.
Did DeMarco, Watt and now Calabria act as CEOs of Fannie and Freddie in controlling its overall and daily activities?
I don't know; I'm still looking into that.
Any result?
By the way, much of the reason for my post was to think out loud and seek conversation on whether this Petrobras/FnF share offering parallel is worth exploring further. I believe that it is, at least for now. The idea that a state-owned company outside the US can raise $70B makes me optimistic for the possibility of an even large share offering for FnF, which will ostensibly be back in the control of private shareholders at or soon after the offering.
The US IPO/SPO process is basically the same. Whether there will be $125 billion plus SPO for Fannie and Freddie or something else will be known several months or more from now.
In your prospectus link (thank you for that), footnote 4 on page S-19 says "We carried out a four-for-one reverse stock split in July 2007 and changed the ratio of underlying shares to American Depositary Shares from four shares for each ADS to two shares for each ADS. Per share amounts for all periods give effect to the stock split." From that I will say "yes" to your first question.
Yes. That is so.
However, that page also shows that shares existed before the September 2010 offering. This looks much more like a secondary offering to me and not an IPO, which is another parallel with FnF. Therefore I don't think I can answer your second question, and it might not be relevant here.
The answer is no to the second question. In August 2000, Petrobas, elevated its ADR common shares to Level III and did the same for its preferred shares in July 2001. Since July 2, 2007, both classes have been available on the NYSE as stock tickers PBR and PBRA respectively.
Certainly. However, Petrobras's prospectus was filed September 23 2010, the day before it was announced to the public. I would expect a similarly short period between filing and announcement for FnF's secondary offering.
The final prospectus was actually accepted and filed on September 27, and 28, 2010. https://www.sec.gov/Archives/edgar/data/1119639/000095012310089286/0000950123-10-089286-index.htm
This is the key question. I don't know the answer right now, but I am looking into it. Do you happen to know?
At least five months for writing reports and filing SEC forms. Underwriting and the roadshow add more time possibly up to a year. The number and quality of staff working on the IPO and bumps in the process road also determines time to completion.
First, the quote from the New York Times piece:
and an assumption that FnF's capital raise won't take appreciably longer due to its (rough) similarity in size. Second, the fact that Calabria and Mnuchin have both talked about an IPO (though I still think that's a misnomer), so the clock may very well have started. It is definitely speculation on my part, but with some reasons to back it up. I welcome any supporting or disconfirming evidence, and I am still doing research.
That is about the amount of time to expect barring unforeseen circumstances barring the lock-up period.
Yeah that was a bit of a ramble on my part, but moot due to the prospectus you linked to. On the first page it shows the USD offering price, which was at a ~2% discount to the market price. That's what I wanted to know. For now I think it's likely that FnF's share offering will also be conducted at a price near where the shares trade the day before the announcement, but there are many moving parts so this is another area where I plan to do more research.
More research is needed. Please use this to guide your endeavor. FPO (follow-on-public offering/SP0 (secondary public offerings) are covered.
NYSE IPO Guide
https://www.fticonsulting-asia.com/~/media/Files/us-files/insights/white-papers/nyse-ipo-guide.pdf
Just another parallel to draw here. Petrobras raised $70B and then said it planned to raise more, though it doesn't appear that this actually ended up happening.
It is in the works. Links given in previous message.
If Calabria is right and the required capital cannot raised in one offering then he too will need to do another if he wants FnF recapped and released in a certain timeframe.
Thanks again for the prospectus link, it is very helpful.
You are welcome
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