Washington Mutual Reorganization Steams Towards February 9th Ex-Date [View article]
Distro,
Here is what the disclosure statement says (pg. 259). Note the filing uses all caps to indicate the significance. They also use bold for "voting and election deadline" which does not copy and paste over.
THE RECORD DATE FOR DETERMINING THE HOLDERS OF SENIOR NOTES CLAIMS (CLASS 2), SENIOR SUBORDINATED NOTES CLAIMS (CLASS 3), CCB-1 GUARANTEES CLAIMS (CLASS 14), CCB-2 GUARANTEES CLAIMS (CLASS 15), PIERS CLAIMS (CLASS 16), PREFERRED EQUITY INTERESTS (CLASS 19), DIME WARRANTS (CLASS 21) AND COMMON EQUITY INTERESTS (CLASS 22) THAT MAY, TO THE EXTENT APPLICABLE, VOTE ON AND, TO THE EXTENT APPLICABLE, MAKE ELECTIONS OR CONTINGENT ELECTIONS WITH RESPECT TO, THE SEVENTH AMENDED PLAN IS THE SAME DATE AS THE VOTING AND ELECTION DEADLINE.
Boiling this down, "the record date for determining holders of preferred and common equity that may make elections (grant release ownership entitling a distribution of new common stock) is the same date as the voting and election deadline". The voting deadline is February 9th.
The statement seems pretty definitive about what the ex-date is. The additional 17 days is to allow time for releases to be granted in case there are ballot delays in sending and receiving them by 2/9. For those purchasing shares on the 9th or just prior, it gives them 17 days to obtain a ballot and get it to the voting agent in time for a distribution.
Sales of shares on the 8th will be a good indication of what the market believes the reorganized company to be worth based upon the information that has been publicly provided.
Shares after the 9th will likely decline precipitously. You could gamble on making a purchase of these post record date shares and attempt to get a distribution but I would highly discourage such a risky bet.
The debtors had no incentive to resolve this case in a timely manner because the longer they take the more senior debt gets paid and the more professional fees that can be charged. The interesting thing is that since Jan 2010 estate assets have not appreciated any more. What the debtor should have done was made a settlement for all parties at that time. Instead they fought equity tooth and nail for nearly two years. The end result has ended up being the same except junior debt would have only had to pay $234M in intercreditor interest in Jan 2010, not $599M. However since 70% of the junior debt is held by hedge funds that are simply passing the interest from one pocket to their other pocket which holds senior bonds to doesn't really matter to the debtor. The only investors who end up losing are retail.
It is regrettable that at one time the debtor said junior debt would receive a 74% recovery when that was never their intent. Consquently it is hard to make an intelligent investment when the information you are being provided is false or inaccurate.
Thanks for dropping in the additional information. I would agree that my intercreditor interest may be high. Only $6.547 billion in cash would be immediately available which would cover all of the senior notes pre+post claim, all the floating notes pre+post claim, but leave junior notes not fully satisifed. They carry the highest interest rate of all. One question was whether or not the junior post claim will acquire interest at FJR or CR. I assumed CR given the debtor's usual generosity. WaMu indicates it may take up to 6 months to solve $320M in disputed tax refunds and to sell $100M to $150M in liquidating trust assets but this may take even longer. I don't think they estimated trust management expenses either. There is also the possibility that the tax refund litigation may not resolve as estimated with a lesser settlement amount so total estate assets may actually decline. Professional fees may also end up being higher than estimated as well with all the litigation ongoing.
As you metioned the disputed claim reserve is estimated at $850M but with the DIMEQ resolution this drops it to $513M, of which only $375M is planned for. I think final allowed claims of $57M is "pie in the sky" thinking by the debtor. Tranqulity and DIMEQ alone makes class 12 allowed claims $58.6M. WAHUQ's best hope for a recovery is that class 12 comes in below $375M but I can't see this happening when the debtor makes all of its projections on the conservative end and was wrong on Tranquility's $49.6M negative and the Anchor settlement which was a $20M positive suprise that took WAHUQ from a $74M to $94M recovery. I can't see the judge changing her Dec 20th opinion on Tranquility after she shot down DIMEQ and TPS in the manner she did and has stuck to her guns about the GSA being F+R despite all the objections and IT allegations. But it could happen.
As for the 13% Runoff Notes its likely that senior noteholders will elect to take them all and the PIERS will see none. The notes are projected to raise $216M on $140M face by 2019, or a 6.8% yield. I can't see the seniors passing that up.
Bankruptcy Fine Print Rattles WaMu Debt [View article]
Mr. Holty,
DIMEQ has always been a bit ambiguous on finding where its currently at. Somewhere in POR-2 I recall a reserve being established for class 12 and the WAHUQ 32% projection seems to confirm that. If there was not a reserve then the debtors should have stated that WAHUQ stands between 0 and 99%. However the markets suggest a DIMEQ loss (5-1 odds) since its trading at 22%. DIMEQ is a 100 or 0, all or none type situation. Traders are only willing to risk $1 to make $5? The market appears to be giving DIMEQ poor chances at a win.
Also in the EC's statement yesterday they suggested that DIMEQ was a major factor in the case and the warrant holders should be a part of the mediation because there was millions at stake and that if DIMEQ lost then preferred equity would have a recovery.
The judge ordered today that everyone but JPM and the FDIC be a part of mediation. She wants a truly "global" settlement that includes all classes from 2 to 22. My estimation is that DIMEQ will take part in that settlement and will get a special partial recovery carved out for them as class 18 (neither class 12 or 22). They have made a good case but there's always the chance they could lose and get moved to class 22 which would mean very little recovery. Highly qualified well overpaid attorneys will determine what percentage recovery properly weighs out the risk vs. the reward, perhaps 50 cents on the dollar?
The markets however currently predict an Armageddon where DIME gets almost nothing (22% right now), PIERS get nothing (10%), and bond holders receive less than 2% interest. According to the markets about $1 billion dollars has just evaporated. In the end someone is going to make a lot of money on this bankruptcy, the question is who. Traders willing to take a stand could make 500% on their money.
Pages 11 (99%) and 12 (32%). Obviously the markets know more than the debtor does, otherwise shares in WAHUQ should be trading closer to $10 rather than $0.
According to a recent TPS filing, it appears that the DIMEQ money may already be baked into the equation as a reserve was established by the estate. If DIMEQ loses then there will be more recovery for those under class 12.
I have a feeling that the subordination clause WAHUQ faces will be negotiated out in mediation.
Bankruptcy Fine Print Rattles WaMu Debt [View article]
The Debtor released last night a recovery projection for WAHUQ of either 32% or 99%. That translates to $10.88 or $33.66/share.
Obviously the market assumes the very worse case, that DIMEQ will win and receive their full allotment, contract rates will be paid to everyone, and that the case will drag on for months more resulting in more estate fees.
Washington Mutual Reorganization Part 2: Fund Insider Trading Charges Prompt Mediation Order [View article]
Fsshon,
Thank you for your readership and your comments.
In conjunction with your comments, to think that the financial melt down of 2008 wasn't exacerbated by profiteering is pure naivety. Yes the bubble had to pop/deflate, but not with such vehemence. Instead power players could take out credit default swaps on vulnerable targets and melt down stocks through shorting. Jim Cramer described it best as taking out property insurance on your neighbor's house. Then when it catches fire, pour gasoline on it. Just try to do that yourself. The police and the insurance companies will take you to jail. But not the power players? It would seem they are immune to the rules.
Profiteers actually wanted businesses to fail. You could say some people wanted America to fail and they were paid handsomely to push the country off the edge. Congress however has decided to seek no recourse. Instead taxpayers bailed out companies like AIG so that those credit fault swaps bets could be cashed out.
The money has to come from somewhere. It doesn't just materialize out of thin air. Now America is struggling because in order for profiteers to make $10s of Billions they had to do $100s of Billions of damage. It is like wrecking a running car to salvage parts. It is a grossly inefficient way to make money.
For those who need a better explanation of the whole situation, Hollywood came pretty close in Wall Street 2. In it a big bank used a hedge fund appropriately named Locust to devour a competitor through naked shorting. From this the competitor bank came to the brink of failure and sold out for a few dollars a share. Script writers obviously had some real life example to take this from. JP Morgan had unlimited access to WaMu's books in March 2008. Think of the kind of temptation that would lead to?
I don't know a single retail shareholder who made money in 2008. Meanwhile the big players made billions. Just ask John Paulson.
The stock market is heavily tilted in favor of the power players. One such situation are hedge funds who sit at tables and make record profits off of bankruptcy using information that any normal retail investor would love to know. Talks in progress, not in progress, $4 billion claims being agreed to early, etc. Who wouldn't want to know that? WaMu preferred stock prices doubled the day that it was announced there were settlement talks going on with the hedge funds even though they ultimately failed. Yet the hedge funds argue in court that things like this are immaterial? Look at were the money falls. The funds squeezed negotiations until they would be paid in full. But obviously no consideration or concern was given to shareholders. They could have asked or held out for more from JP Morgan rather than concede $2.1 billion. I think the judge can sense this and that is why she let the claims move forward. She is trying to find some sort of fair resolution that helps so many aggrieved shareholders. The court has received 100s of letters from individual investors. That must touch at the judge's consciousness.
Without a settlement there is a good chance this will devolve into decades long litigation situation where legal fees will consume the entire estate and both the hedge funds and equity will be the losers. The Meritor Bank bankruptcy has been going on for 20+ years now. WaMu could as well. I know there are many shareholders out there wanting blood/justice/revenge/... but a settlement may be the most intelligent, though unsatisfying, choice.
Washington Mutual Reorganization Part 1: Fund Insider Trading Charges Prompt Mediation Order [View article]
"I work with Aurelius Capital Management, one of the so called “Settlement Noteholders” in the Washington Mutual bankruptcy case.
I am writing to seek an immediate correction to your article below (Washington Mutual Reorganization Part 1: Fund Insider Trading Charges Prompt Mediation Order).
In your article, you report that the court wrote that, "the Settlement Noteholders acted recklessly in their use of material nonpublic information" but reserved judgment in immediately declaring it as insider trading.
This is not correct. The judge did not determine that the noteholders acted recklessly. Rather, she simply said that the Equity Committee had “colorable claims” to that effect. The term “colorable claims” refers only to a plausible legal claim. That means it is a claim strong enough to have a reasonable chance of being valid if the legal basis is generally correct and the facts can be proven in court. The claim doesn’t even need to result in a win to be considered a “colorable claim.”
This is a very important distinction, and I hope you can issue a correction and update your story as soon as possible."
Thank you, Aurelius Capital Management
Aurelius,
Thank you for contacting me with your concerns regarding the recently released article. Accuracy is something we strive for here at Seeking Alpha. I have contacted the editors to seek a correction in the following manner:
The judge's quoted opinion will now read:
"The Court finds that the Equity Committee has made sufficient allegations and presented enough evidence to state a colorable claim that the Settlement Noteholders acted recklessly in their use of material nonpublic information."
Rather than: "...the Settlement Noteholders acted recklessly in their use of material nonpublic information."
Bankruptcy Fine Print Rattles WaMu Debt [View article]
Guest147, my next release will be focused on the preferred and common shares in WaMu. I released debt as a separate article because the main article is too long and complex to make any more than a passing mention of the debt. The debt drop did warrant its own highlight however.
Bankruptcy Fine Print Rattles WaMu Debt [View article]
"Regarding the price drop on 9/14: in the first seven minutes of trading the price dropped from $14.25 to $6.50, but on a volume of just 4,700 shares."
Sleepless, what do you think this information means? That the drop in the PIERS on 9/14 is unsubstantiated? On 9/14, 680,613 shares of the PEIRS went short on a float of only 466,000? So someone is out there swimming without their trunks on.
Also, CRT Capital Group analyst Kevin Starke wrote his clients that the debt structure had now changed with this ruling and recoveries were at risk. Yet some have reported his company is sitting on the bid. Isn't there some sort of SEC issue with leading your clients to sell when you are buying?
Bankruptcy Fine Print Rattles WaMu Debt [View article]
Larry, thank you for readership and your comments.
I'm already one step ahead of you. This week I have been working on publishing a separate two part article in regards to the IT and disallowance issues. So far its length and the need to cite multiple sources has delayed its publication somewhat. I hope to have it out soon, but not likely until early next week.
Judge Considers Probe of WaMu's Chapter 11: Implications for Hedge Funds and Shareholders [View article]
While the PIERS (WAHUQ) do have a stated liquidation value of $50 in the last published 10-K, the trustee only filed a claim of approximately $34 per share. Consequently as seen in the last MOR (Nov 2010) there is a liability line entry of only $765,674,200 for junior sub debt, not the full $1.15 billion issued in Q2 2001. Against 23 million units, the PEIRS would stand to get $33.29 in full recovery plus their post petition interest claim (either FJR or contract rate depending on ruling). POR-6 indicated a likely recovery of 74 percent, or $24.63/share.
The reason why the trustee only claimed $34 was is in part because the PIERS were sold below face and contained a warrant feature for common shares in WMI. The initial exercise price was $32.33 for 1.2081 shares. In 2007 the exercise price was $32.81. In 2041, the exercise price was the liquidation value of $50. The trustee valued the exercise price at $33.29 for September 2008 and made his claim for that amount times 23 million units.
It is being argued that PIERS are equity because of the warrant feature, however the trustee has stated because the warrants were never exercised their classification as class 16 is correct.
(DIMEQ is also arguing that because their litigation tracking warrants were never cashed into WMI common stock [even though proceeds are to be automatically exchanged upon completion <was still in appeals at time of bankruptcy declaration>] that they should receive the proceeds from the Anchor Savings litigation as cash and should be moved to class 12.)
The PIERS are "Trust (P)referred (I)ncome (E)quity (R)edeemable (S)ecurities" so the name also implies the possibility of being equity. However they are preferred equity of a trust called WaMu Capital Trust 2001 and the trust purchased junior sub bonds issued by WaMu Incorporated. So WMI now owes the money to the trust and the trust is owned by the PIERS holders.
Washington Mutual Reorganization Steams Towards February 9th Ex-Date [View article]
Here is what the disclosure statement says (pg. 259). Note the filing uses all caps to indicate the significance. They also use bold for "voting and election deadline" which does not copy and paste over.
THE RECORD DATE FOR DETERMINING THE HOLDERS OF SENIOR NOTES CLAIMS (CLASS 2), SENIOR SUBORDINATED NOTES CLAIMS (CLASS 3), CCB-1 GUARANTEES CLAIMS (CLASS 14), CCB-2 GUARANTEES CLAIMS (CLASS 15), PIERS
CLAIMS (CLASS 16), PREFERRED EQUITY INTERESTS (CLASS 19), DIME WARRANTS (CLASS 21) AND COMMON EQUITY INTERESTS (CLASS 22) THAT MAY, TO THE EXTENT APPLICABLE, VOTE ON AND, TO THE EXTENT APPLICABLE, MAKE ELECTIONS OR CONTINGENT ELECTIONS WITH RESPECT TO, THE SEVENTH AMENDED PLAN IS THE SAME DATE AS THE VOTING AND ELECTION DEADLINE.
Boiling this down, "the record date for determining holders of preferred and common equity that may make elections (grant release ownership entitling a distribution of new common stock) is the same date as the voting and election deadline". The voting deadline is February 9th.
The statement seems pretty definitive about what the ex-date is. The additional 17 days is to allow time for releases to be granted in case there are ballot delays in sending and receiving them by 2/9. For those purchasing shares on the 9th or just prior, it gives them 17 days to obtain a ballot and get it to the voting agent in time for a distribution.
Sales of shares on the 8th will be a good indication of what the market believes the reorganized company to be worth based upon the information that has been publicly provided.
Shares after the 9th will likely decline precipitously. You could gamble on making a purchase of these post record date shares and attempt to get a distribution but I would highly discourage such a risky bet.
WaMu Junior Debt Recovery Becoming Unlikely [View article]
The debtors had no incentive to resolve this case in a timely manner because the longer they take the more senior debt gets paid and the more professional fees that can be charged. The interesting thing is that since Jan 2010 estate assets have not appreciated any more. What the debtor should have done was made a settlement for all parties at that time. Instead they fought equity tooth and nail for nearly two years. The end result has ended up being the same except junior debt would have only had to pay $234M in intercreditor interest in Jan 2010, not $599M. However since 70% of the junior debt is held by hedge funds that are simply passing the interest from one pocket to their other pocket which holds senior bonds to doesn't really matter to the debtor. The only investors who end up losing are retail.
It is regrettable that at one time the debtor said junior debt would receive a 74% recovery when that was never their intent. Consquently it is hard to make an intelligent investment when the information you are being provided is false or inaccurate.
WaMu Junior Debt Recovery Becoming Unlikely [View article]
Thanks for dropping in the additional information. I would agree that my intercreditor interest may be high. Only $6.547 billion in cash would be immediately available which would cover all of the senior notes pre+post claim, all the floating notes pre+post claim, but leave junior notes not fully satisifed. They carry the highest interest rate of all. One question was whether or not the junior post claim will acquire interest at FJR or CR. I assumed CR given the debtor's usual generosity. WaMu indicates it may take up to 6 months to solve $320M in disputed tax refunds and to sell $100M to $150M in liquidating trust assets but this may take even longer. I don't think they estimated trust management expenses either. There is also the possibility that the tax refund litigation may not resolve as estimated with a lesser settlement amount so total estate assets may actually decline. Professional fees may also end up being higher than estimated as well with all the litigation ongoing.
As you metioned the disputed claim reserve is estimated at $850M but with the DIMEQ resolution this drops it to $513M, of which only $375M is planned for. I think final allowed claims of $57M is "pie in the sky" thinking by the debtor. Tranqulity and DIMEQ alone makes class 12 allowed claims $58.6M. WAHUQ's best hope for a recovery is that class 12 comes in below $375M but I can't see this happening when the debtor makes all of its projections on the conservative end and was wrong on Tranquility's $49.6M negative and the Anchor settlement which was a $20M positive suprise that took WAHUQ from a $74M to $94M recovery. I can't see the judge changing her Dec 20th opinion on Tranquility after she shot down DIMEQ and TPS in the manner she did and has stuck to her guns about the GSA being F+R despite all the objections and IT allegations. But it could happen.
As for the 13% Runoff Notes its likely that senior noteholders will elect to take them all and the PIERS will see none. The notes are projected to raise $216M on $140M face by 2019, or a 6.8% yield. I can't see the seniors passing that up.
Bankruptcy Fine Print Rattles WaMu Debt [View article]
DIMEQ has always been a bit ambiguous on finding where its currently at. Somewhere in POR-2 I recall a reserve being established for class 12 and the WAHUQ 32% projection seems to confirm that. If there was not a reserve then the debtors should have stated that WAHUQ stands between 0 and 99%. However the markets suggest a DIMEQ loss (5-1 odds) since its trading at 22%. DIMEQ is a 100 or 0, all or none type situation. Traders are only willing to risk $1 to make $5? The market appears to be giving DIMEQ poor chances at a win.
Also in the EC's statement yesterday they suggested that DIMEQ was a major factor in the case and the warrant holders should be a part of the mediation because there was millions at stake and that if DIMEQ lost then preferred equity would have a recovery.
The judge ordered today that everyone but JPM and the FDIC be a part of mediation. She wants a truly "global" settlement that includes all classes from 2 to 22. My estimation is that DIMEQ will take part in that settlement and will get a special partial recovery carved out for them as class 18 (neither class 12 or 22). They have made a good case but there's always the chance they could lose and get moved to class 22 which would mean very little recovery. Highly qualified well overpaid attorneys will determine what percentage recovery properly weighs out the risk vs. the reward, perhaps 50 cents on the dollar?
The markets however currently predict an Armageddon where DIME gets almost nothing (22% right now), PIERS get nothing (10%), and bond holders receive less than 2% interest. According to the markets about $1 billion dollars has just evaporated. In the end someone is going to make a lot of money on this bankruptcy, the question is who. Traders willing to take a stand could make 500% on their money.
Bankruptcy Fine Print Rattles WaMu Debt [View article]
http://bit.ly/p7ZkUZ
Pages 11 (99%) and 12 (32%). Obviously the markets know more than the debtor does, otherwise shares in WAHUQ should be trading closer to $10 rather than $0.
According to a recent TPS filing, it appears that the DIMEQ money may already be baked into the equation as a reserve was established by the estate. If DIMEQ loses then there will be more recovery for those under class 12.
I have a feeling that the subordination clause WAHUQ faces will be negotiated out in mediation.
Bankruptcy Fine Print Rattles WaMu Debt [View article]
Obviously the market assumes the very worse case, that DIMEQ will win and receive their full allotment, contract rates will be paid to everyone, and that the case will drag on for months more resulting in more estate fees.
Washington Mutual Reorganization Part 1: Fund Insider Trading Charges Prompt Mediation Order [View article]
Washington Mutual Reorganization Part 2: Fund Insider Trading Charges Prompt Mediation Order [View article]
Thank you for your readership and your comments.
In conjunction with your comments, to think that the financial melt down of 2008 wasn't exacerbated by profiteering is pure naivety. Yes the bubble had to pop/deflate, but not with such vehemence. Instead power players could take out credit default swaps on vulnerable targets and melt down stocks through shorting. Jim Cramer described it best as taking out property insurance on your neighbor's house. Then when it catches fire, pour gasoline on it. Just try to do that yourself. The police and the insurance companies will take you to jail. But not the power players? It would seem they are immune to the rules.
Profiteers actually wanted businesses to fail. You could say some people wanted America to fail and they were paid handsomely to push the country off the edge. Congress however has decided to seek no recourse. Instead taxpayers bailed out companies like AIG so that those credit fault swaps bets could be cashed out.
The money has to come from somewhere. It doesn't just materialize out of thin air. Now America is struggling because in order for profiteers to make $10s of Billions they had to do $100s of Billions of damage. It is like wrecking a running car to salvage parts. It is a grossly inefficient way to make money.
For those who need a better explanation of the whole situation, Hollywood came pretty close in Wall Street 2. In it a big bank used a hedge fund appropriately named Locust to devour a competitor through naked shorting. From this the competitor bank came to the brink of failure and sold out for a few dollars a share. Script writers obviously had some real life example to take this from. JP Morgan had unlimited access to WaMu's books in March 2008. Think of the kind of temptation that would lead to?
I don't know a single retail shareholder who made money in 2008. Meanwhile the big players made billions. Just ask John Paulson.
The stock market is heavily tilted in favor of the power players. One such situation are hedge funds who sit at tables and make record profits off of bankruptcy using information that any normal retail investor would love to know. Talks in progress, not in progress, $4 billion claims being agreed to early, etc. Who wouldn't want to know that? WaMu preferred stock prices doubled the day that it was announced there were settlement talks going on with the hedge funds even though they ultimately failed. Yet the hedge funds argue in court that things like this are immaterial? Look at were the money falls. The funds squeezed negotiations until they would be paid in full. But obviously no consideration or concern was given to shareholders. They could have asked or held out for more from JP Morgan rather than concede $2.1 billion. I think the judge can sense this and that is why she let the claims move forward. She is trying to find some sort of fair resolution that helps so many aggrieved shareholders. The court has received 100s of letters from individual investors. That must touch at the judge's consciousness.
Without a settlement there is a good chance this will devolve into decades long litigation situation where legal fees will consume the entire estate and both the hedge funds and equity will be the losers. The Meritor Bank bankruptcy has been going on for 20+ years now. WaMu could as well. I know there are many shareholders out there wanting blood/justice/revenge/... but a settlement may be the most intelligent, though unsatisfying, choice.
Washington Mutual Reorganization Part 1: Fund Insider Trading Charges Prompt Mediation Order [View article]
I am writing to seek an immediate correction to your article below (Washington Mutual Reorganization Part 1: Fund Insider Trading Charges Prompt Mediation Order).
In your article, you report that the court wrote that, "the Settlement Noteholders acted recklessly in their use of material nonpublic information" but reserved judgment in immediately declaring it as insider trading.
This is not correct. The judge did not determine that the noteholders acted recklessly. Rather, she simply said that the Equity Committee had “colorable claims” to that effect. The term “colorable claims” refers only to a plausible legal claim. That means it is a claim strong enough to have a reasonable chance of being valid if the legal basis is generally correct and the facts can be proven in court. The claim doesn’t even need to result in a win to be considered a “colorable claim.”
This is a very important distinction, and I hope you can issue a correction and update your story as soon as possible."
Thank you,
Aurelius Capital Management
Aurelius,
Thank you for contacting me with your concerns regarding the recently released article. Accuracy is something we strive for here at Seeking Alpha. I have contacted the editors to seek a correction in the following manner:
The judge's quoted opinion will now read:
"The Court finds that the Equity Committee has made sufficient allegations and presented enough evidence to state a colorable claim that the Settlement Noteholders acted recklessly in their use of material nonpublic information."
Rather than: "...the Settlement Noteholders acted recklessly in their use of material nonpublic information."
Respectfully,
Troy Racki
Bankruptcy Fine Print Rattles WaMu Debt [View article]
Bankruptcy Fine Print Rattles WaMu Debt [View article]
Bankruptcy Fine Print Rattles WaMu Debt [View article]
Sleepless, what do you think this information means? That the drop in the PIERS on 9/14 is unsubstantiated? On 9/14, 680,613 shares of the PEIRS went short on a float of only 466,000? So someone is out there swimming without their trunks on.
(http://bit.ly/oKiObg)
Also, CRT Capital Group analyst Kevin Starke wrote his clients that the debt structure had now changed with this ruling and recoveries were at risk. Yet some have reported his company is sitting on the bid. Isn't there some sort of SEC issue with leading your clients to sell when you are buying?
Bankruptcy Fine Print Rattles WaMu Debt [View article]
I'm already one step ahead of you. This week I have been working on publishing a separate two part article in regards to the IT and disallowance issues. So far its length and the need to cite multiple sources has delayed its publication somewhat. I hope to have it out soon, but not likely until early next week.
Judge Considers Probe of WaMu's Chapter 11: Implications for Hedge Funds and Shareholders [View article]
The reason why the trustee only claimed $34 was is in part because the PIERS were sold below face and contained a warrant feature for common shares in WMI. The initial exercise price was $32.33 for 1.2081 shares. In 2007 the exercise price was $32.81. In 2041, the exercise price was the liquidation value of $50. The trustee valued the exercise price at $33.29 for September 2008 and made his claim for that amount times 23 million units.
It is being argued that PIERS are equity because of the warrant feature, however the trustee has stated because the warrants were never exercised their classification as class 16 is correct.
(DIMEQ is also arguing that because their litigation tracking warrants were never cashed into WMI common stock [even though proceeds are to be automatically exchanged upon completion <was still in appeals at time of bankruptcy declaration>] that they should receive the proceeds from the Anchor Savings litigation as cash and should be moved to class 12.)
The PIERS are "Trust (P)referred (I)ncome (E)quity (R)edeemable (S)ecurities" so the name also implies the possibility of being equity. However they are preferred equity of a trust called WaMu Capital Trust 2001 and the trust purchased junior sub bonds issued by WaMu Incorporated. So WMI now owes the money to the trust and the trust is owned by the PIERS holders.