Replies to post #371713 on Fannie Mae-No Politics (FNMA)

[tcj]

I still think they take advantage of warrants, although I hope they don't. When you come up with $12 pps if warrants are exercised, is that at the existing strike or did you raise the exercise price?

I'm trying to come up with a pps under assumptions that excess NWS gets applied to original deal so a senior prfd balance of $10 billion, $30 billion on outstanding jr's and a capital requirement of $70 billion. Allow 2 years for recap, combined new issuance of prfd and common or incentive to convert with a delay on divs for a period. Not sure what would be realistic for new issuance and also what the "right" new strike would be.

Maybe it turns out to be a much better deal, but I'm interested in coming up with a pps based on this methodology where the admin looks to alleviate majority of suits and get a win for gov. I think this is a great place to start in finding a base pps.

[Donotunderstand]

yes

but the preferred shares - unless capital is huge - go on the market at about 50% of face as there is no dividend payment for years to come and risk of chapter 11 erasing equity (be it common or preferred as this preferred equity is not trust preferred stock nor is it junior debt disguised as preferred equity. Those two would approach par - regular equity preferred stock of a low capitalized F and F will likely trade in a 50% of face zone - all IMO