Replies to post #7549 on Dime Bancorp Inc (fka DIMEQ)

[linda1]

JPMC just filed today its estimate of the Tax Gross-Up amount.

And to my surprise JPMC actually acknowledges some value to the LTWs by basing the fair market value of the Anchor Litigation on the trading price of the LTWs at the time it bought WMB.

Here is a copy and paste of some of it:


" JPMC has now determined that the fair market value of the Anchor judgment that should
be attributed to the purchase price it paid for WMB's assets on the date that it acquired those
assets was $55,385,946.36.

This calculation is based upon the market value of the Litigation
Tracking Warrants that were publically trading on the date of the acquisition.1

However, only a portion of this amount should be attributed to the tax gross up because only a portion of overall judgment is subject to a tax gross up. Utilizing the amounts awarded by the Court, JPMC has determined that 54.35% of the fair market value should be allocated to the grossed up portion of the judgment for tax purposes.2

54.35% of the determined fair market value is $30,104,036.67. When this amount is deducted from the full amount of the award subject to gross up, JPMC would experience a taxable gain of $197,986,963.33. JPMC's tax rate for 2015 is 37.535%. Applying this rate to the amount of the gain to be grossed up, results in a gross up of $118,969,673.71. "



1
As this Court is aware, the Litigation Tracking Warrants (“LTW”) were issued by Dime Bancorp, Inc.
(“Dime”), the successor-in-interest to Anchor Savings Bank. The holders of the LTWs were to be entitled to shares of Dime at the conclusion of the litigation in amount to be determined once the plaintiff prevailed in the litigation and collected a judgment. The LTWs were ratified by Washington Mutual Inc. (“WMI”), the holding company of Washington Mutual Bank, at the time that WMI acquired Dime, thereby stepping into the shoes of Dime. At the time of the acquisition of Dime by WMI the LTWs were actively trading on the NASDAQ market and therefore can
serve as a basis to determine the fair market value of the contingent judgment as of the date of the acquisition of Dime by WMI

2
The pre-gross up total judgment awarded by this Court in its May 18, 2015 Order is $419,645,910.91. Order at 38. Of that amount, $228,091,000.00, or 54.35%, is subject to a tax gross up. Id. at 37.

[linda1]

Here is also a copy and paste from some of the Government's Status Report on the Tax Gross-Up:


" In its draft status report, Anchor stated that the $55.4 million fair market value figure for
the Anchor lawsuit was based on the market value of the Dime Litigation Tracking Warrants
(LTWs) on the date of JPM’s purchase of WMB assets from the FDIC in September 2008, and
that the LTWs can serve as a basis to determine the fair market value of the contingent judgment.

By their terms, the LTWs were convertible into common shares of WMB’s holding company,
Washington Mutual, Inc. (WMI). If the Court were to conclude that there was a more
appropriate method to determine the fair market value, e.g., due to possible depression of the
market value of the LTWs relative to the value of the underlying Anchor lawsuit as of September
2008 due to WMI’s imminent bankruptcy, then the Court may need to reconsider Anchor’s
estimate of fair market value.

Our understanding is that a change in the amount of gross-up due to a change in JPM’s
tax basis in the Anchor lawsuit would alter the parties’ net economic positions, not just the
amount of tax gross-up to be paid back to the Treasury. Accordingly, we believe that additional
investigation is appropriate to confirm JPM’s estimate, and, if necessary, to state any reasons
for objection. "