Tne 0-1% payout for the Preferreds in POR 6.5 is a non-starter. Any REAL evaluation placed on WaMu with real numbers and not any of Rosen's phoney-baloney numbers will show that the Preferreds are the fulcrum security, and that we'll be receiving way more than the 1% number that Rosey tossed out there.
Now, if we assume that the above is true, game theory would suggest that I, as a holder of P's and NO U's, would rather have ALL of the residual go to the Preferreds, and NONE of it going to the U's.
Why share with the U's when there is no basis in law or fact to support giving commons even a single penny, at the expense of the Preferreds? Also known as the great haircut.
Now, as someone suggested last night, I would have no problem at all in giving the commons a long-term, way out-of-the-money warrant on the emerging stock of NewCo, but that would be it.
A 10 year out of the money warrant would take into account the possibility that IF the NewCo increased in value (using the NOL's, mergers, etc.), any common that the P's received would bring our valuation close to FV for us. Let's say at around the $7.5 billion capitalization point. And it would be AT THIS POINT that common should start "sharing" in the pie. But not before Preferreds are made whole (or at least close to it).
That's my 2 cents. I'm ready to get flamed by all the holders of U's that think that we should socialize their losses because "it's the fair thing to do."
