Replies to post #11617 on Washington Mutual Preferred fka WAMPQ

[Bizreader]

This is clearly the opportunity that Cramer was talking about tonight on his show.

http://www.investmentweek.co.uk/public/showPage.html?page=854104 Thanks MrPenny for finding that.

And, Cramer didn't have to mention WAMU when talking about this BUT he did.

Go figure. I already drew my conclusion that he intends to say that "I told you so." when WAMU breaks out.

But that's just me.

[argc]

Issuance of JPM resitrictve common warrants as settlment/compensation from sfuchen

http://74.125.95.132/search?q=cache:m4aOKaEqD-0J:messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_W/threadview%3Fm%3Dtm%26bn%3D86316%26tid%3D102926%26mid%3D102933%26tof%3D20%26off%3D1+I+was+thinking+the+possibility+for+sfuchen&cd=1&hl=zh-CN&ct=clnk

The original msg had been deleted..thanks google cache and sfuchen from yahoo board

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I was thinking the possibility for JPM/FDIC to compensate WMI in cash. The answer I came up with is small. I present my thought on the likely form of settlement eventually.

JPM sells 2.3Billion warrants(with a restrictive time period) to WMI shareholders at the price of $1 each(it matches the amount of convertible Ps and Qs). That being said, WMI shareholders, including TPG, must come up with total $2.3BB cash to secure our rights to the warrant. JPM gets a net cash inflow.

JPM pays Hs and Ks in face value, and FDIC shows up to guarantee all WMI bonds with the fresh $100BB funds.

So one immediate concern is, "Will JPM common be diluted?"

NO. What JPM gets is,

1. waiver of further legal actions against JPM (it's the most important one)

2. $2.3BB from WMI shareholders, $4.4BB deposite at WMB, $20BB NOLs.

3. WMI's money making subsidiaries and WaMu logo.

Given all the benefits above, JPM common should not be impacted a lot. Then what we get and pay?

Suppose the price of JPM common is $25, WMI shareholder A is in position of 100k Qs.

Shareholder A needs to pay JPM $100k cash in exchange for 100k JPM common warrants.

the value of A's warrants = $25 x 100k = $2.5MM

net value = $2.5MM - $100k = $2.4MM


How's that everyone? I know not many people can come up with that amount of cash within a period of time...anyways, it's my thought. Thanks.