Replies to post #39031 on Washington Mutual Preferred fka WAMPQ

[gophilipgo]

For all complaining about the split, here's another way to look at our options:

1. Preferreds receive the whole company - WAMPQs would own approximately 40% of the new company (12% more than the plan currently allows for). We'd have approximately $6 billion in NOLs available to use.

2. Under the current plan - WAMPQ owns 28% of the company, but the company has approximately $17 billion in NOLs to use.

Think carefully about the better option. Would you prefer 12% more of the company, or would you prefer $11 billion more in NOLs? Personally, I think option 2 is far, far better, and in fact, is closer to APR than the first one, if the NOLs are to be used, as we all expect they will be. That being said, if commons can receive less than 30% while still preserving all $17 billion in NOLs, then they should get that reduced percent, with the remainder going to preferreds.

[gophilipgo]

The split should be 77/23, in my opinion. Here's why:

Assuming that both WAMUQs and WAMPQs both satisfy the "old and cold" rule needed to maximize the $17 billion in NOLs, these are what the numbers look like to get a 51% ownership while giving WAMUQs the smallest percentage possible to do so:

Under the 77% preffered / 23% common split

WAMPQ
40.5% x 77% (the total amount that should be owned by preferreds, imo) = 31.1%
31.1% x 95% (the total amount owned by all of equity) = 29.6% ownership of NewCo

WAMUQ
23% (the total amount that should be owned by commons, imo) x 95% = 21.8% ownership of NewCo

29.6% WAMPQ + 21.8% WAMUQ = 51.4% "old and cold" requirement satisfied

ADDENDUM: If TPS qualifies as "old and cold" then commons could be dropped altogether.