Replies to post #409026 on Mr Cooper Group Inc fka COOP

[clawmann]

BF: You wrote: "When KKR exercises the warrants, they will realize an "ordianry gain/loss" on the PPS of WMIH...."

I don't believe the exercise of a warrant results in a taxable event.
Please explain why you believe the exercise of a warrant, which involves the purchase of a stock at a pre-specified price, results in a taxable event. I don't think it does.

[clawmann]

BF: You wrote: "When KKR exercises the warrants, they will realize an "ordianry gain/loss" on the PPS of WMIH...."

I don't believe the exercise of a warrant results in a taxable event.
Please explain why you believe the exercise of a warrant, which involves the purchase of a stock at a pre-specified price, results in a taxable event. I don't think it does.

[David West]

Another good effort Don. It should be clear to all why it is to KKR's benefit to exercise the warrants as closely as possible to the strike price, without shorting. However, it might be construed as using inside information to exercise the warrants before the announcement. However they do it, I feel certain they will know exactly how to do it and without worry.

Best regards,
David West

[nranger]

"... When you look at the "big picture" you can see it benefits KKR shareholders in terms of 2015 profits to exercise the warrants as near the strike price as they can get."

The price was recently around $1.50. Why didn't they exercise the warrants then? When the KKR deal was first announced the PPS was under $2.00. Why didn't they exercise the warrants then? So, now we are at $2.00 and they will have to pay even more taxes if they exercise now. Does that mean the price will be lowered yet again to give them yet another chance to buy at the lower PPS?

[writonwater]

I think that the exercise of the warrant is an "opening transaction" not a "closing transaction" and thus it is not a trigger of a taxable event. It would only be upon the sale of the common shares at a higher than acquisition price that taxes would be owed.

I also think that KKR would be most happy to exercise their warrants at a higher not a lower common stock price just as you or I would.

It would only be in the case of the common price rising combined with the warrants being marketable securities that KKR sold at a higher price than their taxable cost that would otherwise produce a taxable event.(I do not think those warrants are tradable but they may be?).....Sam....All imo, I'm not an accountant.