The GSE share Dilution referred to is the Secondary Offering by J.P Morgan & Morgan Stanley - financial Advisors - to reach reduced 3% Cap levels for EXIT fm GOVT HOSTAGE Conservatorship.
Currently the combined market cap of FnF is less than $4 billion.
3% cap level means $180 billion equity. FnF currently have $45 billion, so $135 billion are missing to reach the required cap level.
The missing capital must come from outside investors (capital raise), because converting the old commons (OTC) into new commons (regular) wouldn't bring a single Cent.
This would result in dilution by roughly factor 34 (= 135 / 4).
If warrants are executed - f.e. to finance affordable home programs (Brookings Institution) -, there would be further dilution by factor 5, which brings total dilution to factor 170.
Market cap of released FnF might be $400 billion (or less). Dilution by factor 170 means old shareholders would get a share of just $2.35 billion.
$2.35 billion is 60% of current market cap. So it's like old commons dropping from now 2$ to $1.20$.
If warrants are NOT executed, it is like old commons advancing from 2$ to 6$.
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