Mr Cooper Group Inc (COOP)

[VivaLasVegas]

Anyone see this Tax Assets Post by Bopfan from the "Y" board???

Thoughts?
Cheers


http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_W/threadview?m=tm&bn=86316&tid=37448&mid=37448&tof=4&frt=2
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WMI Tax Assets 1-Dec-08 10:55 am I have to thank HeHee for opening my eyes this weekend to something so simple we all should have discussed it before.

While we don't know what exact value WMI put on its stock in its seized subsidiaries (i.e., out of its $32 billion in assets), the seizure of those subsidiaries resulted in an investment loss that WMI (or its acquirer) can write off against gains.

This is a HUGE write off. I have seen people on this board posting $20 billion and $24 billion numbers for the subsidiaries' value, but it really doesn't matter. What does matter is that this write off is in ADDITION to WMI's NOL.

Remember the NOL is the operating losses the seized banking and credit card subsidiaries incurred in their course of business. This number we know to be about $20 billion.

Accordingly, WMI has $40 to $44 billion in tax losses that an acquirer could use. At the 35% tax rate this is $14 to $15.4 billion in value in addition to the $4.4 billion in cash sitting with JPM and the other assorted assets WMI has.

Up until now we've been talking about $11.4 billion in firm assets to tempt an acquirer. We now know there are at least $18.4 billion in assets. This money means that after the preferreds and debts are paid there is over $6 billion to flow to common.

The $11.4 billion number has concerned me for weeks because though I knew there was plenty to tempt an acquirer I was not sure how much would be available to common, and as I've said many times, TPG must be satisfied. If there is $6.4 billion for commons, that is $3.76 per share.

By the way, the foregoing assumes JPM would NOT be the buyer because though JPM could use the NOL, it could not use the loss from the subsidiaries seizure because as owner of the subsidiaries it has not incurred a loss in connection with their seizure.

Another poster commented that an acquisition can't be effected merely to obtain a tax loss, but that would not be a problem here because of the $4.4 billion and the other assets WMI has.

I think the $40 billion in tax losses makes WMI very attractive, and once the assets/liabilities are known potential bidders should emerge.