La opinión de este tipo me parece interesante, la comparto.
Re: $19.2 a good level to buy H's? 50 minutes ago
WAHUQ
Here's how I see it. I don't think they are a sub or WMI preferred.
The WMI Trust 2001 (PIERS) in this bankruptcy
- are WMI junior subordinated debt
- in addition they are subordinated to all subordinated debt
- payable to the trust ( a separate legal entity -- not WMI, )
- with essentially the same terms as the trust's ( a separate legal entity -- not WMI ) preferred stock / WAHUQ.
http://en.wikipedia.org/wiki/Delaware_st...
http://en.wikipedia.org/wiki/Trust-prefe...
Here's a current prospectus.
http://www.secinfo.com/dRqWm.4fT99.htm#1...
They aren't a sub, Trusts don't have owners, they have beneficiaries.
http://delcode.delaware.gov/title12/c038...
The Warrants aren't stock.
They should be ranked after the subordinated debt in their own class as Subordinated subordinated debt.
http://en.wikipedia.org/wiki/Trust-prefe...
To be eligible as Tier 1 capital, such instruments must provide for a minimum five-year consecutive deferral period on distributions to preferred shareholders. In addition, the intercompany loan must be subordinated to all subordinated debt and have the longest feasible maturity. The amount of these instruments, together with other cumulative preferred stock a bank holding company may include in Tier 1 capital, may constitute up to 25 percent of the sum of all core capital elements, including cumulative perpetual preferred stock and trust preferred stock.Non-financial companies are more likely to use less complex structures, such as issuing junior subordinated debt directly to the public.
They are Pref's in SOMETHING and the SOMETHING is the Trust.
The Trust loaned the money to WMI that the trust collected from issuing it's Pref's, the H's
More to follow
IMO
MrPennyIII
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Re: $19.2 a good level to buy H's? 49 minutes ago
On the question if they merged with WMI. Merging with WMI would negate the tax benefits that was the reason for the trust in the first place.
http://en.wikipedia.org/wiki/Trust-prefe...
Advantages
Trust preferred securities are used by bank holding companies for their favorable tax, accounting, and regulatory capital treatments. Specifically, the subordinated debt securities are taxed like debt obligations by the IRS, so interest payments are deductible. Dividends on preferred stock, by comparison, are paid out of after-tax income. The company may therefore enjoy a significantly lower cost of funding.
If issued by a bank holding company, they are treated as capital rather than liabilities under banking regulations, and may be treated as the highest quality capital (tier 1 capital) if they have certain characteristics. Since the amount of liabilities (such as deposits) that a banking institution may have is limited to some multiple of its capital, this regulatory treatment is highly favorable and is why the trust preferred structure is favored by bank holding companies.
To be eligible as Tier 1 capital, such instruments must provide for a minimum five-year consecutive deferral period on distributions to preferred shareholders. In addition, the intercompany loan must be subordinated to all subordinated debt and have the longest feasible maturity. The amount of these instruments, together with other cumulative preferred stock a bank holding company may include in Tier 1 capital, may constitute up to 25 percent of the sum of all core capital elements, including cumulative perpetual preferred stock and trust preferred stock.Non-financial companies are more likely to use less complex structures, such as issuing junior subordinated debt directly to the public.
The trust wasn't closed. Because there would be sec docs and we still have the WAHUQ.
The trust wasn't merged with WMI after the bankruptcy because that would require a vote. ( see my post above). I have been a holder and a follower and saw nothing on it.
They wouldn't have done it before Sept 08 as it would have been treated as a liabilities under banking
regulations, not the precious capital.
The Q was added to WAHU after the P,K,U's. I think this was done ( not 100% ) because they could not file the reports.
On the argument that Justin brought up that WAHUQ were equity and therefore equity was in the money.
I didn't agree or thought he was taking a page out of Rosens playbook.
H's are equity ( failing to mention they are equity in the trust) and they are in the money.
There are a few other things in the prospectus that where not acted upon or ignored by the trustee.
The trustee gave the holders chance to comment.
As for the interest or value, the Wells Fargo trustee has done the deal with Rosen and I don't see it being undone. It's debt and they have made their claim on the trustees albeit poor or lazy interpretation of the prospectus.
IMO
MrPennyIII
