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Zitat Scott Fox:
Slow week. Page 10 of the 10K. FWIW " Anti-takeover provisions in our Certificate of Incorporation and Amended and Restated Bylaws (“Bylaws”) and under Delaware law could make a third party acquisition of WMIH difficult.
WMIH’s Certificate of Incorporation and Bylaws currently contain provisions that could make it more difficult for a third party to acquire WMIH, even if doing so might be deemed beneficial by WMIH’s stockholders. These provisions could limit the price that investors might be willing to pay in the future for shares of WMIH’s common stock. WMIH is also subject to certain provisions of Delaware law that could delay, deter or prevent a change in control of WMIH.
We may need to sell additional shares of WMIH’s common stock or other securities in the future to meet WMIH’s capital requirements. In such circumstances, the ownership interests of WMIH’s stockholders prior to such sale could be substantially diluted.
WMIH has 3,500,000,000 shares of common stock authorized for issuance and 10,000,000 shares of preferred stock authorized for issuance. As of March 1, 2016, WMIH had 206,168,035 shares of its common stock issued and outstanding. The possibility of dilution posed by shares available for future sale could reduce the market price of WMIH’s common stock and could make it more difficult for WMIH to raise funds through equity offerings in the future. In fact, WMIH has consummated two corporate financing transactions that are, on an as-converted basis, dilutive to stockholders. Specifically, in connection with our Series A Convertible Preferred Stock (the “Series A Preferred Stock”) offering, effective January 30, 2014, WMIH issued 1,000,000 shares of Series A Preferred Stock, which may be converted into 10,065,629 shares of WMIH’s common stock, and Warrants to purchase 61,400,000 shares of WMIH’s common stock; and on January 5, 2015, in connection with the Series B Preferred Stock Financing, WMIH issued 600,000 shares of Series B Preferred Stock, which may be converted into 342,857,143 shares of WMIH’s common stock.
The value of WMIH’s common stock may be affected by terms and conditions of the Series B Preferred Stock, which is senior in priority to WMIH’s common stock. See “Risk Related to the Series B Preferred Stock”.
The redemption or repurchase of our Series B Preferred Stock may have a material adverse effect on holders of WMIH’s common stock.
We have limited business operations and assets. If we redeem or repurchase our Series B Preferred Stock, it is likely that our business and financial prospects will be adversely affected and the holders of WMIH’s common stock are likely to lose a significant part or all of their investment. While we would expect to seek alternative financing under those circumstances, there can be no assurance such financing would be available at terms we would determine to be acceptable, or at all."
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Zitat CSNY:
Nothing new here, and we've crunched these numbers many, many times. WMIH is on the hook to issue up to 600MM (or so) common, but we've been discussing this for over a year now. What this 'disclosure' doesn't explain is why first, KKR, and later, KKR and Citi, did not receive anti-dilution protection.
In my opinion they didn't get it because the lion's share of the remaining 2.9B shares are headed to benefit legacy shareholders. About 100MM or so of this 2.9B will be used to sweeten cash acquisitions and to provide compensation incentives for senior employees at operating subsidiaries. I discussed this recently with a couple of senior traders with about 40 years experience on Wall Street and in London between them. They were shocked when I told them the $10MM KKR deal (which they agreed was nothing but an option) and the $600MM KKR/Citi deals did not provide anti-dilution protection. They said this is very strange as that would be the greatest concern to sophisticated investors. They agreed that the 3.5B authorization is exceptional and that it is very likely that players like Savitz and Tepper (who got to the trough first) will receive the lion's share of those common shares. I told them that in my opinion KKR and Citi were offered participation on a 'take it or leave it' basis and there was enough in it for them through a relatively small investment to take those terms.
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Zitat Scott Fox:
Yeah, like I said, slow week. Thanks for sharing this discussion. I can't see the BOD doing anything to dilute their shares, especially at our low share price. We are only investors but over 30% of stockholders are institutions. If the BOD would open us up to dilution the funds would likely call for their heads and exclude them from the 'club'. It's going to continue to be dull here until we get news of any kind. The share price is being held too tightly for there not to be a reason for it. Did I read it right where it said no inter-company transfers of funds until the notes are paid in full? I think it was on page 8, 9 or 10. They stated that any money transferred could go towards a M/A IF NEEDED.
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Sorry, page 6. It does look to me that the run-off notes don't have to be paid, only if WMIH wants/needs to gain access to profits for making a deal. I can see a payoff if no deal is pending or there is no need for funds. "Risks Related to Our Business"
WMIH and its subsidiaries have limited operations; WMIH is a holding company, and its only material assets are cash on hand, cash held in trust and its equity interests in its operating subsidiary and its other investments, and WMIH’s principal source of revenue and cash flow are distributions and certain payments from our wholly-owned subsidiary, WMMRC, which is operating in runoff mode and is subject to restrictions from paying us dividends and investment income from our investment portfolio.
As a holding company, our only material assets are our cash on hand, cash held in trust, the equity interests in our subsidiaries (WMMRC and WMIIC) and other investments. As of December 31, 2015, WMIH had no operations other than WMMRC’s legacy reinsurance business with respect to mortgage insurance which is being operated in runoff mode. WMMRC has not written any new business since the Petition Date. As of December 31, 2015, excluding restricted cash and assets held in trust, we had approximately $76.4 million in cash, cash equivalents, and investments, which includes $6.5 million held by our wholly-owned subsidiary, WMMRC; WMIIC holds no assets and generates no revenues. For the foreseeable future, our principal source of revenue and cash flow will be investment income from our investment portfolio, if any, cash and cash equivalents on hand, distributions from our operating subsidiary, if any, and certain payments made to us by WMMRC pursuant to the Administrative Services Agreement, dated as of March 19, 2012, between WMIH and WMMRC (the “Administrative Services Agreement”) and the Investment Management Agreement, dated as of March 19, 2012, between WMIH and WMMRC (the “Investment Management Agreement”). WMMRC is restricted by the Second Lien Indenture from making distributions to WMIH until the Runoff Notes are paid in full and is restricted by insurance law from making distributions to us unless prior approval is obtained from the Insurance Commissioner of the State of Hawaii. Thus, our ability to service our debt, finance acquisitions and pay dividends to our stockholders in the future is dependent on (i) the ability of our operating subsidiary to generate sufficient net income and cash flows to make upstream cash distributions to us, and (ii) our ability to obtain access to the funds held in escrow from the Series B Preferred Stock Financing. Our subsidiaries are and will be separate legal entities, and although they may be wholly-owned or controlled by us, they have no obligation to make any funds available to us, whether in the form of loans, dividends, distributions or otherwise except for distributions of Runoff Proceeds (as defined in the Indentures) to pay the holders of the Runoff Notes under the Indentures. The ability of our operating subsidiary to distribute cash to us will also be subject to, among other things, restrictions that are contained in our Second Lien Indenture, availability of sufficient funds and applicable state laws and regulatory restrictions. Claims of creditors of our subsidiaries generally will have priority as to the assets of such subsidiaries over our claims and claims of our creditors and stockholders. To the extent the ability of our operating subsidiary to distribute dividends or other payments to us could be limited in any way, this could materially limit our ability to grow, pursue business opportunities or make acquisitions that could be beneficial to our businesses, fund and conduct our business or fund dividends, redemptions or repurchases.
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Zitat kenwalker:
Remember the NOL Poison pill ability with these "shares".
Summary of a Section 382 "Poison Pill." Many public companies with significant NOLs and NCLs have recently adopted poison pill plans that are intended to
discourage an ownership change. In 2009, over 40 public companies adopted section
382 poison pills, including Citigroup Inc.-and Ford Motor Company. A section 38~
poison pill is similar to an anti-takeover "poison pill," except that an anti-takeover
poison pill will typically have a higher ownership threshold (10% to 20%) than
a section 382 poison pill (4.9%). Under a section 382 poison pill, each shareholder (
would receive a right entitling it to acquire a preferred stock interest that is economically equivalent to a share of common stock. If a shareholder engages in
a transaction that creates a prohibited percentage point increase, the other shareholders would be able to exercise their rights and acquire the preferred stock
interest at a significant discount (e:g., 50%) compared to the value of the corporation's outstanding common stock. As a result, the shareholder engaging in
the prohibited transaction would be diluted.
………… where’s the exercise right? We don’t need them because at any point they could do the escrow swap. When, how much? Fluid situation and it needs to be timed and though it could be enacted it needs to be held back to an assets swap so KKR “gets” something also.
My reading of NOL's is: easy to loose / hard to buy. The rules are set up where you can sell but ( greater than 5% owner ) you can't buy without shooting your foot.
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ZItat Scott Fox:
Mostly protecting themselves JJ. Most companies use this type of wording in their releases. 3.5 billion shares authorized is a huge amount for a company our size or many larger ones. There was a reason for that number to be agreed upon IMO.
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Zitat kinged:
"The redemption or repurchase of our Series B Preferred Stock may have a material adverse effect on holders of WMIH’s common stock.
We have limited business operations and assets. If we redeem or repurchase our Series B Preferred Stock, it is likely that our business and financial prospects will be adversely affected and the holders of WMIH’s common stock are likely to lose a significant part or all of their investment. While we would expect to seek alternative financing under those circumstances, there can be no assurance such financing would be available at terms we would determine to be acceptable, or at all."
As the deadline approaches whereby the requirements are met to convert preferred shares to common shares, one could argue that the risk for WMIH common shareholders significantly increases. There will be $600mm in cash due to those preferred holders and WMIH will NOT have the capital. Stock price will be adversely affected well before the deadline hits. Of course, if anyone is paying attention, this is highly unlikely as those players did not inject the cash into WMIH to end up trying to get it back later.
This means that if a deal does not get done in a reasonable amount of time prior to the deadline, a press release indicating that the deadline has been extended will surely be announced. Share price will pop upon such an announcement, but will likely be very short lived as the announcement could be interpreted as a lack of a deal coming sooner than later.
I have discussed share price in the past with the argument that a floor has been put in place based on the conversion. However, any major market correction or a lack of a deal with deadline getting closer will surely cause share price to drop below that floor. Will we see $1.75 again? Doubtful, but possible.
Thinking about how much cash WMIH has already burned away with just the preferred capital raise itself and the lost deal, the big players that invested must see the potential for a much greater return than that $50mm or so. Interesting to think about.
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Zitat kenwalker:
An "owner shift" is any change in the ownership of the stock of the loss corporation that affects the percentage of stock of such corporation owned by any person who is or becomes a 5-percent shareholder before or after such change. Treas. Reg. § 1.382-2T(e)(1). For example, the acquisition of additional stock by an existing 5-percent shareholder would constitute an "owner shift."
Warrants or Preferred Stock is one thing .............. common stock another. Short of a gradual shift the greater than 5%'er are locked in or ................... locked out.
IRC sections 382 and 383 provide that, where the ownership of a company changes by more than 50 percentage points in any 3-year period ( and ) the lowest percentage of stock of the loss corporation (or any predecessor corporation) owned by such shareholders at any time during the testing period.
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Zitatende
MfG.L:)
Alles nur meine pers. Meinung, kein Kauf- oder Verkaufs-Empfehlung!