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EC Letter
After reading the EC's letter, I feel a bit better regarding our situation. Here are a few positives I got from the letter (please note that I maintain my position that we should try to break up the GSA via TPS's Appeal. Dual track with the DS Hearing while trying to amend and clarify the POR as much as possible and follow the EC's guidance to accept the plan, still waiting for the DS Hearing). Is this ideal? No, but our options are limited as well.
What I got positively from the letter:
1) Rosie's DS made it sound as if we are only going after PRE-partition litigations, and that Weil and AM will be our lawyers. In that sense, PRE is a limiting word and is negative. However, EC's letter clarify that Weil and AM is to continue previous litigation only. This way, PRE is positive because all future (POST) litigation will have different lawyers. I still think Susman and Co is the best litigation lawyers to hire.
2) The runoff notes. Have to read it many times to finally understand that the 13% on the loans is not as bad as it seems. The term "loan" got me confused. It is really not a loan but a sale of the reinsurance policies at a discount. It was termed as a loan so if there are more policies proceeds, we will get the rainfall. Suppose we have $100 Mil worth of policies, we are selling them at a 13% discount so we get the money now vs waiting to collect. We got the $87 Mil now trading in those policies. If those policies cannot payoff the runoff notes, new co will not have to pay more, if there is more and we are able to payoff the runoff notes, overage from the policies belongs to new co. In the mean time, new co can operate new startup and undergo M&A and any addition income goes to new co and need not be paid to the runoff notes.
(I guess it was setup this way so we have immediate funds to use while at the same time if there are more policies then stated by Rosie we will be protected).
3) K's is only the transition trustee for a short period until (the letter said approx. 6 months). After he hands off all previous matters from WMI, we can have a new trustee.
At least the trust committee has a judge who is watching over him for us.
All in all, I feel better after reading the letter. It is not the best we can do, but alternative is to wait for a much longer time.
(I changed my rating to buy, from strong buy. Still think new co is worth more than a $1 a share so the current prices are low but since the upside is now limited via the plan, is still good to buy but not strong anymore)
EC Letter
After reading the EC's letter, I feel a bit better regarding our situation. Here are a few positives I got from the letter (please note that I maintain my position that we should try to break up the GSA via TPS's Appeal. Dual track with the DS Hearing while trying to amend and clarify the POR as much as possible and follow the EC's guidance to accept the plan, still waiting for the DS Hearing). Is this ideal? No, but our options are limited as well.
What I got positively from the letter:
1) Rosie's DS made it sound as if we are only going after PRE-partition litigations, and that Weil and AM will be our lawyers. In that sense, PRE is a limiting word and is negative. However, EC's letter clarify that Weil and AM is to continue previous litigation only. This way, PRE is positive because all future (POST) litigation will have different lawyers. I still think Susman and Co is the best litigation lawyers to hire.
2) The runoff notes. Have to read it many times to finally understand that the 13% on the loans is not as bad as it seems. The term "loan" got me confused. It is really not a loan but a sale of the reinsurance policies at a discount. It was termed as a loan so if there are more policies proceeds, we will get the rainfall. Suppose we have $100 Mil worth of policies, we are selling them at a 13% discount so we get the money now vs waiting to collect. We got the $87 Mil now trading in those policies. If those policies cannot payoff the runoff notes, new co will not have to pay more, if there is more and we are able to payoff the runoff notes, overage from the policies belongs to new co. In the mean time, new co can operate new startup and undergo M&A and any addition income goes to new co and need not be paid to the runoff notes.
(I guess it was setup this way so we have immediate funds to use while at the same time if there are more policies then stated by Rosie we will be protected).
3) K's is only the transition trustee for a short period until (the letter said approx. 6 months). After he hands off all previous matters from WMI, we can have a new trustee.
At least the trust committee has a judge who is watching over him for us.
All in all, I feel better after reading the letter. It is not the best we can do, but alternative is to wait for a much longer time.
(I changed my rating to buy, from strong buy. Still think new co is worth more than a $1 a share so the current prices are low but since the upside is now limited via the plan, is still good to buy but not strong anymore)
