Fannie Mae-No Politics (FNMA)

[kthomp19]

The calculation of the share price is much simpler: if 7.2 billion shares (warrants redeemed) are worth 250 billion dollars, then one share is worth 34.72 USD. Such an approach also avoids confusion regarding a JPS conversion.

No, it doesn't work that way. The warrants gives Treasury 79.9% of the, ahem, Fully Diluted share count which includes all dilution from the IPO and a potential junior pref conversion. Treasury can achieve a share count far greater than 7.2B even if they write off the seniors.

If the valuation really is $330B and $264B goes to Treasury (which is 80%; the article says the warrants are worth more than $250B), that leaves $66B behind for everyone else. $25B for the IPO (article says $20-30B) means $41B for the commons and juniors combined. A junior pref conversion gives them $33B of that, leaving $8B behind for the legacy common, or around $4.44 per share.

If there is no junior pref conversion then the legacy common gets to keep more, but the market cap has to be adjusted downward by $2B (total junior pref dividends) times whatever P/E is used (looks like around 12 to get a $330B valuation). That knocks the total valuation for the common down to $306B.

Starting at $306B, $245B goes to Treasury as 80% and $25B for the IPO leaves $36B for the legacy common, or $20 per share.