Washington Mutual Preferred fka WAMPQ

[marayatano]

Sorry but commons are going to zero and prefs will hopefully see the greater of 0-1% as stipulated in the GSA.

Steve, the GSA was based, at the time, before December 31, 2010.

What has changed?

Answer: We are in 2011.

NOL from $100 mil revision upwards to $5.5 Bil.

Further, in this case the Court concludes that the
reorganized company has value in excess of the enterprise value
of $157.5 million set by the Debtors’ expert. The expert
acknowledged that his valuation was based only on the cash flows
expected to be generated by the runoff of the insurance assets
currently held by the Reorganized Debtor and did not consider
that the Reorganized Debtor might start or acquire another
business. (Hr’g Tr. 12/6/2010 at 32.) The fact that the
Reorganized Debtor is raising new capital through the rights
offering suggests otherwise. See, e.g., Exide, 303 B.R. at 60
(committee’s expert opined that fact that the senior creditors
and management were taking stock in the reorganized company is a
“strong indicator that the company is being undervalued”). But
see In re Mirant, 334 B.R. 800, 832-35 (finding that “[t]he market is not the proper measure for the value of Mirant Group
for the purpose of satisfying claims” because the market often
undervalues companies in bankruptcy).
Further, the Reorganized Debtor may in fact be a public
company (depending on the number of creditors who accept stock
instead of cash or who participate in the rights offering). A
public company has additional value in its ability to raise
capital and acquire (or be acquired by) other businesses.
MicroSignal, Corp. v. MicroSignal Corp., 147 Fed. Appx. 227, 232
(3d Cir. 2005) (finding that a merger would result in a public
company which is better equipped to raise capital); David N.
Feldman, Reverse Mergers + Pipes: The New Small-Cap IPO Reprinted
and Updated from Pipes: Revised and Updated Edition – A Guide to
Private Investment in Public Equity, 3 Bus. L. Brief (Am. U.) 34,
39 (2007) (“It is easier to raise money as a public company than
as a private company.”). Finally, because the Debtors will not
emerge from bankruptcy before December 31, 2010, the Debtors
could potentially have the full use of their approximately $5
billion in NOLs.47 See Chaim J. Fortgang & Thomas M. Mayer, Valuation in Bankruptcy, 32 UCLA L. Rev. 1061, 1129-30 (1985)
(noting that NOLs often are a debtor’s largest asset).
Therefore, the Court cannot accept, as the Plan Supporters
contend, that the rights offering is of no value. Mr. Thoma is correct. The Plan must be modified to allow all PIERS Claimants the opportunity to participate in the rights offering. See, e.g., Combustion Eng’g, 391 F.3d at 241, 248 (vacating
confirmation order based on apparent disparate treatment of
creditors within a class).

The Equity Committee also complains that there is no
provision in the Plan for its continued existence after
confirmation. Because any distribution to preferred shareholders
depends on what the Liquidating Trustee can recover, the Equity
Committee contends that it should have a supervisory role or at
least the ability to seek relief in this Court if the Liquidating
Trustee is not performing. The Court agrees with the Equity
Committee that it should continue to have a role, albeit limited,
to protect the interests of the shareholders.

The Plan Objectors also complain that the Debtors have
designated their CRO as the Liquidating Trustee. (Ex. D-5 at
102.) There does not appear to be any mechanism for replacement
of the Liquidating Trustee unless he resigns or dies. (Id.) The
Court agrees with the Plan Objectors that there should be some
mechanism for replacement of the Liquidating Trustee by the
beneficiaries of the Trust.

Variable: Contract rate vs. Federal judgment rate. This alone would be favorable to Equity.

Releases...

Now, if you factor just the above, equity being part of the liquidating trust and EC as an "overseer", MP: increased from 100 mil to $5.5 Bil, reorganized value of debtor is based on a "run off" of the business, BUT does NOT take in to account if the reorganized debtor were to start, acquire another business or be acquired by another entity, etc.

Remember, in 2010, preferreds were 0% to 1%. Certain things have changed in favor of equity (more importantly preferreds as they are first in line).

The above is strictly my opinion only. Do not trade based on anything I comment on.

imo