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http://messages.finance.yahoo.com/Stocks_(A_to_Z)/...tof=37&frt=2
Zitat kingedxxxxx:
Guys, I again want to clear the air on the real value of the NOLs. We continually see some people claiming NOLs at face value and this is absolutely ridiculous. Three things:
1. Actual value = NOL x tax rate
2. Actual value = This number x present value
3. Actual value = Present value x discount paid by a buyer
So, to start with a random number of 10b in NOLs, the most that these NOLs are worth are 3.5b (at a tax rate of 35%.) Now, if it takes five years to create 10b in profits (that's alot of profit guys), you have to come up with the present value of the 3.5b which may be around 3b. Now, if you need someone to buy the value of these NOLs, they are unlikely willing to pay more than 50 cents on the dollar which gives us 1.5b in real cash value IF WE CAN FIND A BUYER FOR 10b in NOLs with a present cash value of 3b meaning they are splitting this value 50/50 with us.
Now, let us look at the SNHs buying out retail. If retail owns 20% of NEWCO, retail only owns 20% of the value of the NOLs. If the present value of the NOLs is 3b, then retail owns 600m of it. If retail was to be bought out at 50% of this value, thus sharing it 50/50 for somebody that could actually use the NOLs, then retail could expect an offer of about 300m plus its 20% portion of the rest of Newco. If rest of Newco is worth 200m, that would be another 40m.
This means that retail holders would be offered 340m or maybe a little more to get rid of them, maybe 400m. So, it will only take a number like this to get rid of retail based on 10b in useable NOLs. If there are more than 10b, then this number would increase if those extra NOLs were deemed to have similar value.
What are my Newco shares worth then? If NOLs are deemed to be worth 1.5b to all of Newco and rest of Newco is worth 200m, then 200m shares of Newco are worth about $8.50 per share (1.7b / 200m shares.) This means that your Ps are valued at $170 and your Ks are $4.25. Notice that the SNHs only need to come up with between 300-400m to get rid of retail holders if they own around 20%.
So, I hope this gives a better understanding of how the NOLs would be valued. Of course, this all assumes that the SNHs have a way to utilize all 10b of the NOLs. If they can only come up with a way to make use of 5b, then the offer to buyout retail would be discounted accordingly.
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ZItat much.faster:
king, you wrote:
"Now, let us look at the SNHs buying out retail. If retail owns 20% of NEWCO, retail only owns 20% of the value of the NOLs. If the present value of the NOLs is 3b, then retail owns 600m of it. If retail was to be bought out at 50% of this value, thus sharing it 50/50 for somebody that could actually use the NOLs, then retail could expect an offer of about 300m plus its 20% portion of the rest of Newco......"
and i disagree with your assumption, that the snh will only offer 50%.
that may be correct, if someone from outside buys or makes a merger, but if the snh (and the other hedgies from tps) wants to make their money to cash, i expect them to pay for my part with 100%.
heck, if they want privacy for their deals, they should pay for it, and if the pay the 20-25% of the small retail 100%, it`s a way to get rid of us quickly.
i doubt, if someone will sell for 2 or 4 dollars the newcoshare.
i expect a bit more, take 1 bio for 50 mio shares .....
and, "So, to start with a random number of 10b in NOLs,..." is a bit off, the 10 bio are the minimum for the newco.
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Zitat charliendud...:
Did you see my little "what-if" scenario in the other thread on how much the SNHs could make off of the NOLs against their capital gains. So if they want the shares to use the NOLs then, yes, they should be worth full value to buyout non-hedge fund shareholders.
These capital gains numbers are based on current percentages. If these expire at this year-end they could go up even higher.
First year ~~ if the put their $3B into investments under the WMI umbrella and made 100% capital gains (LT or ST) and used the NOLs to not pay taxes .. they've saved $1B.
Second year ~~ they use their full $6B portfolio, make 100%, no taxes, they save (earn) $2.1B.
(So in two years they have doubled their investment by saving over $3B in taxes. That's their initial investment principal.)
Third year ~~ same scenario $12B earnings .. they save $4.2B.
At this point, they have saved/earned $7.2B (& more by making money on what they saved) by using $21B in NOLs (capital losses).
King: "So, to start with a random number of 10b in NOLs,.."
Couple of things ... 1) that seems to be the big question of just what NOLs number will be for NewCo. 2) So anyone looking at your prorated numbers broken down to a per share level should keep that in mind.
All this talk of the SNHs buying out retail is just that ... talk. We have NO IDEA what details were agreed on in those WEEKS and WEEKS of mediation when it was decided that the NewCo would go to Equity holders.
Since it only took TPS about 2 days after their depositions and one morning at the DE Court to come on board with the deal, we have no clue as to what the plans are for the company since it took weeks for the EC, SNHs, and Debtors to come to terms with that same deal, which wasn't too far from the one in May.
It's speculation (but what isn't right now) but they may have ironed out the deal of what will happen after NewCo emerges and what role SNHs will play in it. That might be why the upfront cash and credit line is fairly low. Just saying we are truly in the dark about what will happen in the next few months with NewCo.
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Zitat deekshant@s...:
I want to add the agreement was just not limited to the share of ownership but about the future of newco that gets them what they want. So, I would assume Equity,SNHs,TPS... have already become aware of the intent and future realistically to get convinced that its well worth the compromise
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Zitat kingedxxxxx:
Totally agree. The purpose of my thread was to give a better understanding of how NOLs are valued (title of thread.) The starting number, as I stated, was only that. We could have 30b in NOLs, but making use of that 30b is a different story. So, 10b was just an easy, round number for people to grasp what it could mean to equity.
Even if it was not the SNHs that bought out retail and there was a way to merge or buy another entity to effect the use of these NOLs at a value paid upon 10b number, the result would be the same as far as the return to preferred and common holders.
So, my biggest concern is how in tarnation is Newco going to legally make use of its NOLs no matter how large the number. We could have 40b in NOLs for all I am concerned, but it means nothing if we can only use 1b of those NOLs.
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Zitatende
MfG.L:)
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