Replies to post #793895 on Fannie Mae-No Politics (FNMA)

[Barron4664]

So if this plan happens as many here are speculating, the commons will most likely be worth less than a dollar? After decades of conservatorship when the GSEs are finally released and turned back over to the private shareholders, two of the largest financial companies with trillions in assets and the underpinning of the real estate market with a gov backstop will be relegated to trading as a penny stock on the OTC? What am I missing? Can they get back onto a real stock exchange with sub dollar common equity?

[The Man With No Name]

Answer:
I agree with you there. I don't see JPS getting 100%. But I do not understand how and why a write down from 100% due to a conversion when JPS holders have to vote on it and it clearly states in the contract ( non convertible) so either they change the contracts or offer JPS holders a carrot or cream pie or something! I really don't know how the Gov can wingle that one? Do you have any insight on what it might look like or offer JPS holders?

The carrot is a release and a projected post release valuation of FnF the JPS holders would deem lower than actual. This is analogous to what creditors angle for in bankruptcy reorganizations. For example, the government projects FnF's Newco Enterprise Value will be 10X earnings yet JPS believe they will trade at 12x (while arguing it will be less). The result of using a lower-than-actual Newco Enterprise Value is that the haircut may turn out to be not much of a haircut at all.

Answer:
I agree with you there also. However $0.25 is on the very low end if the greedy Gov does convert everything however more likely between $.70 to $2.25. If they don't convert the warrants then yes maybe just maybe around $8 to $12.

Legacy commons have near zero value because of the capital shortfall. There will be no windfall for legacy commons. The Newco Enterprise Value will determine any residual value to legacy commons. As mentioned above, JPS holders will be arguing for the lower end Newco valuation. So will any new investors that will be needed to fill any remaining capital shortfall. The only feasible avenue for release includes a full conversion of the SPS. A write down doesn't help with the capital requirements, a conversion does. Furthermore, new investors won't touch this unless the SPS are gone. All these factors add up to legacy commons ending up with virtually nothing, it just depends on what the size of the gift Treasury allows them, because that's what it will be.

[Donotunderstand]

Ace or KT or

I agree with you there also. However $0.25 is on the very low end if the greedy Gov does convert everything however more likely between $.70 to $2.25. If they don't convert the warrants then yes maybe just maybe around $8 to $12.

HELP

can one of you walk me from .25 or ? to 8 a share common

I think one is a conversion price when and IF JPS is converted - but at the end - given the massive number of common shares --- !!! how does it get to 8 post conversion of the LP $ amount which is so high (I repeat - the WTS are 4:1 and if the earnings hold up - I can see 20 -30 a share post such conversion but that is 4:1 not the massive dilution if SP/LP $ value become common - and equity goes from owning 100% (or 20% with WT exercise) to say 1% ? - to me that suggest (indirectly) the PPS otherwise would be say 800 ?

[Wise Man]

You can't say "JPS par (stated) value" because they are two different stock values.
Par value is the value as stated in the companies' books.
Stated value is when there is no par value.
The JPS have par value, $25 or $50, not stated value.
On the other hand, the SPS have no par value and a stated value that coincides with the Liquidation Preference.

It denotes that you are clueless, as seen in your call for a swap JPS (AT1 Capital) for Common Stocks (CET1), despite that FnF have generated a whopping $433B worth of Common Equity (Retained Earnings account: CET1) that remains unaccounted for, once their Financial Statement fraud with the $132B SPS LP/offset absent from the Balance Sheet is adjusted.
Not even $1 of CET1 has been recovered by the corrupt plaintiffs and their remedies don't recover it either.
Asking for debt forgiveness (SPS written off) doesn't count. It's just too crazy.

juniors will end up with somewhere between 50% and 100% of par (stated) value via a conversion to common. Not converting the juniors makes no sense due to the CET1 capital requirement in the ERCF.

Everbody knows who are you and your other aliases. We have two plaintiffs writing on this board regularly.