Replies to post #356947 on Mr Cooper Group Inc fka COOP

[clawmann]

Absolutely. You will note that the $145m valuation in the DS has, IMO, a couple of very obvious flaws.

First, it is a liquidation valuation, which is very different than the valuation that would be assigned to a going concern.

Second, it starts out with the judge's September newco valuation, which was based largely on an assumption that the NOL's would be of the highly restricted variety, and so the judge greatly discounted their nominal value when coming up with a present value. I don't think the less-restricted NOL's that the newco will actually have should be given such a severely discounted present value.

Third, although the DS liquidation valuation adds in the $75million in cash that will be contributed as working capital, it then subtracts the $140 million in non-recourse - non-recourse - notes that are not general obligations of the newco but are secured solely by the existing reinsurance portfolio, which has itself been valued at $140 million (see EC Q/A top of page 4). So I don't understand at all why the $140 million valuation of that portfolio has not be added in; it is an asset of the newco. We have a $140 million asset with a 13% projected annual income stream securing a $140 million non-recourse obligation carrying a 13% interest rate, so why is this not a wash?

BTW, the EC made a big deal out of achieving that "non-recourse" feature; and I agree. It is a big deal. In the May/June settlement deal that failed, the EC walked away in large part because that feature was missing from the note.