Ow come on, are preferreds playing the saviour role now?
The EC, where both common and preferred were represented, knew what was behind door number two.
They knew which assets were there, and they knew we could pursue them.
So they knew the waterfall to equity would be bigger than 7 billion. This event did not, and will not fall out of the sky.
To get TPS on board, they (commons) needed some leverage. And you can write this down: TPS did NOT get on board because of an additional 5% stake in WMIH!!
TPS got on board, because EC showed them the timeline in which said assets would be liquidated, where they are, how much they will be worth and most important of all: 9+ years interest on top of their face value.
Now, that's fair and reasonable.
Remember, Michael Willingham was the head negotiator during mediation. What does he own? Only commons.
He is a forensic accountant, so he has the needed experience to lay down the numbers and get people on his boat.
On top of that: I believe IF, and that is a big IF, equity get's LTI's issued it will be only for the remainder of what is left in LT funds right now and NOT what will flow from the FDIC-R.
LT or WMIIC will just be a pass through entity for cash receivable from FDIC-R. All IMO, but I'm referring to the news article by the LT:
"The Trust will issue Liquidating Trust Interests to WMI's former shareholders if the Trust is able to monetize Liquidating Trust Assets in amounts sufficient to pay-in-full claims held by beneficiaries of the Trust who are senior to members of Classes 19 and 22, and if a shareholder satisfied all conditions applicable to receiving any such Liquidating Trust Interests. There can be no assurances that the Trust will be able to monetize assets in a manner sufficient to give effect to the foregoing. "
Remember the 75/25 split only applied to WMIH and ANY distribution of LTI's for equity.
And what are the Liquidating Trust Assets?
"a) Cash to be distributed by the Reorganized Debtors, pursuant to the Plan as Disbursing Agent to holders of Allowed Administrative Expense Claims b) Cash necessary to pay the fees and expenses owed… c) Cash necessary to reimburse the Reorganized Debtors for fees and expenses… d) Creditor Cash on the Effective Date; and e) the equity interest in WMI Investment Corp
Notice, no assets from WMIIC are mentioned. No possible "future cash distribution by WMIHC or FDIC" (which IS mentioned specifically in news article above!!). Notice also the last line from the news article:
"There can be no assurances that the Trust will be able to monetize assets in a manner sufficient to give effect to the foregoing. " And that is very true statement, when purely talking about Liquidating Trust Assets!
So the LTI's equity will get issued (if ever) will be limited by proceeds from said Liquidating Trust Assets ONLY. Cash distribution by FDIC receiver and/or assets from WMIIC on the other hand will be much much more substantial.
Also a BIG reason why FDIC-R was and is not released.
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