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Friday, March 28, 2014 10:22:08 AM
I am not in favor of a wind down
But - lets take Fairholme - where the owners of Prfd own a new company - with capital = to FV of pfd
GOV and Equity (non jr pfd) own the runoff company
In that scenario - some method is determined to release F and F from the "sr prfds" (call them equity - infusion - interest - loans - obligation)
In that scenario I assume all payments again count against some form of MATH that equates to a dynamic declining balance loan at 10% per annum interest
Do I want this ?
Nope
But if the pfd are out of the way - with NEWCO
And if the SWEEP money counts against "money owed" (however named or defined) then it comes down to
Run off value - minus stub owed
And that might not be bad - or might be great or might be terrible for common ---- but
A. It hopefully eliminates SWEEP (returns that money to Runoff old F and F)
B It recognizes that equity owns 20% or up to x % (a number higher then 20%)
Then yes - such a method of mapping out our fate as equity holders might be horrible or great ----
But it is a beginning of a new way to talk - a new sound in DC - and it might - (I say might) - start to sound like F and F revived and allowed to compete on a level playing field
I assume what equity wants is no 80% to GOV
We own F and F
F and F survives
The money paid - pays off all obligations
*and an assumption the duopoly dissapears
I do not see that
I see stuff that is good - lets leave it undefined - but at 20%
e.g. forget runoff - asssume ongoing - I assume (assumption) so math to see what is "still owed Gov" that has a stub at 25% or 35% of original "aid" .... such company is in good shape to then thrive IMO - .... and I would be glad to own a Fannie that owes 25% of infusion to Fannie and is allowed to capitalize (say an IPO where in x $ are raised and GOV takes half and half is Fannie Capital)
All pure fantasy - all better then wind down or death
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