Replies to post #597272 on Fannie Mae-No Politics (FNMA)

[kthomp19]

the citi conversion if you study closely is apples / oranges.

How so? I'm not saying that the two situations are exactly alike, but I don't yet see how they are not comparable at all.

Financially the govt was not diluted by a generous pref/common exchange ratio like they would here with the warrants in a potential exchange.

Actually it seems like they were. Treasury's Citi warrants were for a fixed number of shares, so those shares represented a smaller percentage of the total after the pref conversion.

Treasury's FnF warrants, on the other hand, wouldn't be diluted by a conversion if the conversion happens first. However, it might be difficult to get the junior holders enough equity value to make a pre-warrant conversion worthwhile to them.

As you said in a prior post, there's very little chance the warrants wouldn't be exercised in advance or in conjunction with an jr pref exchange offer rather than after.

I have changed my mind on this in light of Treasury having been willing to let its Citi warrants be diluted by a prior pref conversion. I think Treasury might try to maximize its overall dollar income, but that doesn't necessarily mean maximizing the warrants' value (and by extension the common share price). Treasury has other ways to make money here, like a partial senior conversion (which still depends on the common share price but allows them to go well above an 80% common stake), commitment fees, extra g-fees (as in the President's 2021 budget), etc.

[Louie_Louie]

+1 Exactly! Keeps using other court cases with other companies to argue his point when this is unlike any of them. The others were done LEGALLY.