NOVC 8K 12.14.18 involved the adm filings to activate and ready the Vote approved at NOVC annual meeting 10/4/18. NOVC had 12 months to spend the money on this adm filing. This allows them to move on the rights offering page 13 see proxy filed 14A, which states the PS Series F (read this filing there is no coupon to the PS Ser F it is just phantom common the right to one common vote (control), dividend for every 1/10th of one PS Ser F 50k PS F authorized x 10k = 500M common equivalents or phantom common for $2.33. This 2.33 number is the exact same cost basis as Mass Mutual Barings. 2nd NOVC settled Nov 29th with Deutsche Bank (note D Bk had sued NOVC sub NovaStar Financial Inc. NFI (similar to NSM that Fortress who owned 68% just sold to COOP aka WMIH aka WaMu ($7B NOL). KKR owns 17% of COOP see Jay Bray, CEO press release on 12:1 reverse split.
NOVC came out of Ch 11 July 2017, their sub NFI came out Ch 11 April 2018 because of D Bk. NOVC Ch 11 Judge Davis tossed D Bk claim out as without merit but D Bk kept suing NOVC aka NFI even though D Bk claim was tossed out in Ch 11. 10 yrs NOVC stated D Bk suit was without merit yet in 12.14.18 8K NOVC settled with D Bk out of the blue. Why settle with D Bk when NOVC and Ch 11 Judge Davis said D Bk had no claim & no merit.
NOVC must have settled with D Bk to prepare a major investment which will finally use NOL $700M + Unrealized Tax Capital Losses $307M (2 trax benefits hidden by GAAP reserve see 10K. In addition, IMO one of the reason NOVC SEC docs have defined the worse condition possible “Going Concern” post Ch 11 is so board members Barry Igdaloff, Howard Amster and Chuck Gillman/Jeff Eberwein designates Howard Tim Eriksen and Lee Keddie could add 833,333 RSU see 14A Proxy (calculated by $25k board pay/ 3 cts PPS the lowest possible conversion price. Note otcshortreport.com tracks shorting on OTCBB issues like NOVC. NOVC has been consistently and massively shorted (these cannot be legal shorts because at 2 cts there is no money to lend, so they must be naked shorts or fail to delivers under SEC - REG SHO exemption that allows market makers on OTCBB to naked short).
The events above give a reasonable person cause to believe the following should be coming very soon:
1. NOVC issues all PS F (see 14A Rights Offering pg 13 500M common equivalents x price of 2.33) and $1.165B cash will be injected. Fortress (holds 67% of Sr Debt today) and Mass Mutual Barings (holds 20% of common today with cost basis of 2.33/share) will take the lead, inserting control of NOVC, hidden Call Rights, NFI, HCS and NOL and UTCL.
2. NOVC once controlled by Fortress/Mass Mutual Barings will eliminate buy out Sr Debt which Fortress controls.
3. NOVC Fortress/Mass Mutual Barings sells Call Rights value hidden by NOVC to NRZ managed by Fortress (read NRZ New Residential Investment Corp home page). May as much as 200M
4. Call Rights on 21 of 26 deals in $3.2B portfolio could fund a onetime dividend see my past posts. These investors above will get most or all of their money back if they pay shareholders a special onetime dividend funded it with sale of the Call Rights (defined in Servicing Rights Transfer Agreement sec 5.04, see back of Q3 10Q for 2007). $200M/600 (94M CSOS per proxy 14A say 100M + 500 M common equivalents from PS F issue per Rights Offering extending NOVC Poison Pill in Proxy) = 33 cts (is cost basis of Barry Igdaloff, Jeff Eberwein/Chuck Gillman, etc).
5. NOVC now with over $1.1 B cash, no Sr Debt & Billion worth of tax benefits; NOL, UTCP is postured like SPAC Special Purpose Acquisition Corporation/Blank Check Corp with billion worth of 2 tax benefits NOL/UTCL. These investors certainly have lined up newcos to acquire. By adding new EBITDAs they turn 500M at $2.33 into 25 per share (TAX FREE). $1.1B is a lot of dry powder to leverage into a nice EBITDA, EPS. I am certain NOVC will create at least 2 EPS at even 10 PE that is 20 PPS. Wesley Edens, COB of Fortress his Partner Peter Briger are two of the most astute investors in the world. Read this article Fortress Investment Group's Junkyard Dogs
Barry Igdaloff and Rose Capital Mgt would be worth over 200M.
Mass Mutual Barings (aka Babson Capital) manages trillions in AUM. Thomas Finke CEO, CIO introduced me (Nov 2017) to William Wallis Director of Alternative Investment at Barings. Wallis told me MM Baring is highly motivated to improve their NOVC investment; $48m across 19.3M common shares (per proxy 14A) cost basis $2.33/share (see also Rights Offering attached to 14A extending the poison pill to protect 700M NOL.) Thomas Akin/Talkot Capital is largest shareholder in NOVC, IMH and DX (ex-COB/CEO at DX), Barry Igdaloff/Rose Capital Mgt is DX and NOVC Board Member, Todd Emoff/Freedom Asset Mgt (close college friend of BI read BI book Guest in Nightmare), Howard Amster NOVC Board member and per 2005 SEC docs owned over 5% of both DX Common and Preferred, I recruited Chuck Gillman (via Whitney Tilson who called CG his small cap guy) and his Partner Jeff Eberwein/Lone Star Value Mgt to NOVC by arranging a phone call between CG and BI Nov 2014. By April 2015 Jeff Eberwein via his HF Lone Star Value Mgt had control of NOVC and LSVM bought 3.2M common shares 25k every day from April to Oct 2015 see Form4s. CG also introduced me to Ben Large, John Climaco, Dilip Singh all running funds connected with these investors. Eberwein is ex PM at George Soros’ shop and ex Viking Global Mgt. Eberwein, Gillman and their friend of 20 yrs David Pointer, new CEO are all Wharton MBAs These investors are some of the most accomplished experts in MBS (NFI ex business model), MSR, Call Rights etc. CEO of NOVC and Wallis asked me to find bidders for Call Rights. I cold called Michael Huang PM at NRZ, Fortress and after 2 months concluded CR NOVC owns are valuable. Against my counsel NOVC continues to not value Call Rights. I introduced Sept 2018 MH to CEO of NOVC and Board to no feedback from NOVC but last week MH told me he submitted “Economics on Call Rights” to CEO. I have tried with no success to get a return call from Barry Igdaloff, Howard Amster, David Pointer, CEO, CFO Carolyn Campbell NOT ONE email or return call.
Bill Wallis also stated Barings wanted to duplicate KKR investment in WaMu aka WMIH/COOP. KKR owns 17% of COOP post acquisition of NationStar for 3.8B months ago. In fact Wallis said Barings and Mass Mutual was in discussions with the architects of KKR investment in COOP: NYSE:PJT investment bank spun out of Blackstone and Simpson Thacher the famed law firm of KKR (per "Barbarians at the Gate". I had no way of appreciating the firm that controlled NOVC Sr Debt, aka NOVC Ch 11 Creditors Committee Fortress who owned 68% of NSM Nationstar (NFI like Mortgage organization) was about to sell NationStar for 3.8M to WMIH/COOP cashing half or 680M in the transaction per SEC docs.
Also read past NOVC SEC docs NOVC which stated last year a 10:1 reverse split was coming. At the time 10:1 reverse split made no sense but with todays information it makes a lot of sense. COOP CEO Jay Bray just did 12:1 split saying “it will make stock price more attractive to sophisticated investors who may not invest in 2.33 stock but will in 23 PPS.”
Fortress and Mass Mutual are two of the most experienced, oldest investors in the world. Wesley Edens, COB of Fortress ran MBS desks at both Blackrock and Lehman Brothers. His Partner Peter Briger ran the most profitable unit at Goldman Sachs aka Special Situation Group with Gold Finger (WSJ reference to Mark McGoldrick now Fortress owned Mount Kellett Capital LLC. Fortress loves to invest in other companies see other Fortress investments; Capstead Mortgage CMO (Fortress owned 100% of DX when Wesley Edens turned DX around 2000-2005 with Barry Igdaloff, Todd Emoff, Tom Akin and Howard Amster, IMH (Fortress owned over 25% of IMH in the past, now Tom Akin largest shareholder), One Main OMF (combo of LEAF + CitiBanks One Main. They adopted the One Main name and symbol OMF. Fortress sold their 40% ownership OMF to Leon Black Apollo Group last year for $2B. I am sure Fortress picked up LEAF aka AIG ex subprime car/personal loans courtesy of Briger past employer. Fortress recently sold their 68% ownership in NationStar NSM to COOP/WMIH/WaMu (7B NOL) for $3.8B cashing half their ownership for $680M cash. As you know NRZ managed by Fortress just cashed over $400M secondary.
These investors most certainly have newcos or ebitda targeted and lined up. Think about NOVC Ch 11 Creditors Committee was led by Fortress by their 67% ownership of Sr Debt. Debtors lead by NOVC Board; Barry Igdaloff and Howard Amster and at the time both Chuck Gillman and Jeff Eberwein were on NOVC Board of Directors. Fortress paid $15.9M to control all 8 Taberna CDOs 6B AUM. Taberna I & II owned 67% of NOVC Sr Debt.
Fortress was awarded picked up 2.3rd of 6.3m NOVC paid Sr Debt in Ch 11 (5.8M all back interest compounded + undefined 500k penalty). Fortress has no money in NOVC Sr Debt and certainly does not want 350 Bpts + 3 mo libor or less then 4% when Wesley Edens, Peter Briger are accustomed to making Billions.
Post NOVC emerging from Ch 11 SEC docs describe NOVC as quasi going concern). SO NOVC Ch 11 did nothing to restore NOVC to sound financial footing (as Joel Sher Ch 11 lawyer takes credit for in press release at Shapiro Sher LLC) and will never monetize in reasonable manner NOL $700M or $307M UTCL (NOVC SEC disclosures have described NOL as very important and valuable) and Ch 11 did no cram down which would have forced all capital layers to compromise for the better good of the whole. The above will accomplish all 3 things and IMO NOVC Board had a quid pro quo understanding with Fortress and the above is the only possible outcome. Do your own due diligence in NOVC and share.
Disclosure: I am/we are long NOVC.
Additional disclosure: Study DX turn around 2000 to 2005 and one will realize DX had the same attributes to NOVC. In fact most of the major investors at NOVC controlled DX during that period including Fortress ownership in CMO which owned DX. Yet Fortress and these same investors have taken NOVC through Ch 11 to leave it in Going Concern status per SEC disclosure. Only one benefit from this move that was Board Members who rrecently received RSU aware of 833.333 (see 14A Proxy that showed these board members converted 25,000 board pay into 633,333 RSU by creating 2-3 cts stock.