Reorganized WMMRRC
With the events of the last couple of days, investors are making the assumption that WAMUQ will live on under the reorganized WMMRRC.
Assuming this happens, then it could very well follow that the DIMEQ LTW's agreement may remain in effect, and thus the LTW's could be converted into WMMRRC stock. This may not be all that bad for LTW holders. We have $356 million($382 million - $26 million expenses)coming from the government that has a 46% tax factor attached as of 2003. Under the WMMRRC umbrella that 46% goes away because of the $17 billion NOL's that WMMRRC has. The LTW's thus could get more shares of WMMRRC because of the tax savings. In addition WMMRRC would get the full $356 million cash. Cash is the one thing WMMRRC will badly need for investments, if it is to realize the benefits of the $17 billion NOL's.
Up until now, we have been looking at this as if LTW's would get the cash distribution directly, about $250 million net. What would an LTW investor rather have, $356 million in WMMRRC stock or $250 million in cash. That $250 million cash distribution would also be subject to capital gains tax above the share purchase cost for most LTW investors. The WMMRRC stock would be a tax free exchange just like any other warrant exchange. LTW holders could then sell their WMMRRC stock, if they wanted to, on the open market.
The one thing the LTW's have to do however, is get back the LTW rights from JPM. The GSA should be expiring at the end of May and with that expiration, everything is back on the table.
