If WMI gets merged with JPM there will be no restrictions on preferred shares. Jackson is right a preferred is a preferred. It represents a debt owed by the issueing company. In WAMU's case they borrowed $3B and issued 3M shares each with a face value of $1000. True, they do trade at various pps rates but the face value always remains the same. If our commons get rolled into JPM commons at some conversion ratio, then they could be restricted for some period of time. JPM preferred's have the same interest rate as ours very similar in structure and content, however, they are not going to trade until 2019. Where does that leave us? Hopefully at the very least we can convert to JPM commons at 48:1 in 2012. They cannot change the content of our prospectus, to do so would put WMI P's in default and they would need to be paid in full at face value.
All of this is conjucture but if it comes to pass JPM will get a wade of cash with very little outlay. A little dilution to offset an enormous amount of acquired assets. It's what JPM wanted all along. Unfortunately, what is good for JPM might just be the best possible solution for us.
