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messages.finance.yahoo.com/Stocks_(A_to_Z)/...;tof=1&frt=2
REORGANIZED OWNERSHIP CHANGE OR NO CHANGE:
We can say that DIME's dilution potential is now defined and manageable in order for continuing owners (Ps and existing commons) to preclude the downside of "change in ownership" and the annual limitations on the NOLs under 382. The PFG needs to similarly be stipulated, their claim is 1/10th DIME's assertion, so the risk about their dilution range appears to be at least quantified. It would make sense to the debtor to complete a similar stipulation with PFG soon.
Even though the alternative "abandonment tax strategy" does preserve the NOL value* at 10/12ths as of the end of February 2012; it is still preferred to have any potential or even remote IRS challenge to the “basis” calculations/components mooted by having "no change in ownership." Also, with continuing equity 50%+ via the Ps and existing commons, the date doesn't matter at all. However, it is fair to ask, how much more is a $14B NOL worth with continuing ownership than $11B (10/12ths abandonment, no IRS challenge) or $4.5B (same abandonment, IRS challenges upheld except for $5.5B amount at the time of the Private Letter Ruling’s last update).
So, for those supporting the settlement, having DIME stipulated is a big deal. The PFG needs to move along also, IMO. Then it is all about APR whether the commons are in or not.
That leaves TPS with the APR argument that commons are getting something "nonqualified gifting" before preferreds are paid in full, and will raise the intra-equity APR dispute on a bankruptcy Class level. The Delaware Bankruptcy Court and the 3rd Circuit are friendlier than others to qualified gifting by senior creditors to lower classes outside of the Plan or with property of the senior creditors. However, I can't find one where it dealt with “intra-equities” that are in different classes; and this ignores the PIERS as it would appear they approve. The settlement parties appear to have planned some defense, first that “there is nothing really there.” The $75M SNH contribution is not a debtor or reorganized debtor without the settlement agreement of equity. Then, WMMRC stripped of $140M of value via the runoff notes is now bankruptcy valued at $-0- leaves only NOLs. They come in two parts of the valuation. Part 1 is the $20M NOL for WMMRC income (now gone, and the $20M related NOL should also be gone). Part 2 is the $50M NOL for new business per the Court’s 2nd Opinion in September.
The argument can be made [now by all of the settling parties, including equity] that the "property" provided by the SNHs via settlement dollars of $75M, without any NOL valuation, provides just around $20M to the benefit of commons with some adjustment for DIME. So the argument is do the commons bring any measurable benefit [unlimited NOLs, higher than any other alternative; protection against negative IRS challenge to abandonment “basis,” etc.] and is that benefit qualifying.
*with the 382 exception for the post/pre rate, the debtor is disclosing only the $5.5B basis at 2008 [as per the amount in the Private Letter Ruling], with the potential additions to $7.4B in the 7thPOR/DS, there is still the $3.6B in other effective date transactions and the ultimate possible basis addition of recording the $4B TPS transaction as of 9/26/08.
POST REORGANIZED OWNERSHIP CHANGE:
It is elemetary that the settling parties will assure that existing by-laws of WMI, if not currently inclusive of the private and public company standard SOP when there are NOLs, will certainly contain an amendment of such for the standard language to preclude subsequent ownership changes ~ i.e., the poision pill. There is some benefit and flexibility if there is "no" ownership change in the two year post reorganization, but the bankruptcy court cannot count that in any way as part of the Plan and the APR issues.
REORGANIZED OWNERSHIP CHANGE OR NO CHANGE:
We can say that DIME's dilution potential is now defined and manageable in order for continuing owners (Ps and existing commons) to preclude the downside of "change in ownership" and the annual limitations on the NOLs under 382. The PFG needs to similarly be stipulated, their claim is 1/10th DIME's assertion, so the risk about their dilution range appears to be at least quantified. It would make sense to the debtor to complete a similar stipulation with PFG soon.
Even though the alternative "abandonment tax strategy" does preserve the NOL value* at 10/12ths as of the end of February 2012; it is still preferred to have any potential or even remote IRS challenge to the “basis” calculations/components mooted by having "no change in ownership." Also, with continuing equity 50%+ via the Ps and existing commons, the date doesn't matter at all. However, it is fair to ask, how much more is a $14B NOL worth with continuing ownership than $11B (10/12ths abandonment, no IRS challenge) or $4.5B (same abandonment, IRS challenges upheld except for $5.5B amount at the time of the Private Letter Ruling’s last update).
So, for those supporting the settlement, having DIME stipulated is a big deal. The PFG needs to move along also, IMO. Then it is all about APR whether the commons are in or not.
That leaves TPS with the APR argument that commons are getting something "nonqualified gifting" before preferreds are paid in full, and will raise the intra-equity APR dispute on a bankruptcy Class level. The Delaware Bankruptcy Court and the 3rd Circuit are friendlier than others to qualified gifting by senior creditors to lower classes outside of the Plan or with property of the senior creditors. However, I can't find one where it dealt with “intra-equities” that are in different classes; and this ignores the PIERS as it would appear they approve. The settlement parties appear to have planned some defense, first that “there is nothing really there.” The $75M SNH contribution is not a debtor or reorganized debtor without the settlement agreement of equity. Then, WMMRC stripped of $140M of value via the runoff notes is now bankruptcy valued at $-0- leaves only NOLs. They come in two parts of the valuation. Part 1 is the $20M NOL for WMMRC income (now gone, and the $20M related NOL should also be gone). Part 2 is the $50M NOL for new business per the Court’s 2nd Opinion in September.
The argument can be made [now by all of the settling parties, including equity] that the "property" provided by the SNHs via settlement dollars of $75M, without any NOL valuation, provides just around $20M to the benefit of commons with some adjustment for DIME. So the argument is do the commons bring any measurable benefit [unlimited NOLs, higher than any other alternative; protection against negative IRS challenge to abandonment “basis,” etc.] and is that benefit qualifying.
*with the 382 exception for the post/pre rate, the debtor is disclosing only the $5.5B basis at 2008 [as per the amount in the Private Letter Ruling], with the potential additions to $7.4B in the 7thPOR/DS, there is still the $3.6B in other effective date transactions and the ultimate possible basis addition of recording the $4B TPS transaction as of 9/26/08.
POST REORGANIZED OWNERSHIP CHANGE:
It is elemetary that the settling parties will assure that existing by-laws of WMI, if not currently inclusive of the private and public company standard SOP when there are NOLs, will certainly contain an amendment of such for the standard language to preclude subsequent ownership changes ~ i.e., the poision pill. There is some benefit and flexibility if there is "no" ownership change in the two year post reorganization, but the bankruptcy court cannot count that in any way as part of the Plan and the APR issues.
