still more on tma

there is most likely a heated debate, for those who care about tma, going on in the investment community about the overall situation for tma. the bear side is that the recent deal is highly dilutive after as the share count will balloon from 400 million to over 3.1 billion shares. and if shareholders do not approve or fail to tender the preferred or warrants that were issued then tma starts paying 18% interest on its $5.8 billion in debt. this would basically be the bankruptcy scenario.

but it's important to note that tma was able to raise the bulk of the money from private (well two are publicly traded) companies as opposed to going to the fed's window. it was legg mason, jpm and matlin, a large hedge fund, that received warrants priced at one cent, as in a penny. these are strong hands and can be considered as similar backstop that the fed provided for the fire sale of bsc to jpm.

these firms can exercise those warrants on april 11. i don't think there is any doubt they will do so and then will own some 80% of the company.

is the deal dilutive? oh yes.

will it give the big three holders the ability to approve the deal, possibly on better terms, come the 6/15 shareholder vote? you bet.

basically tma has done a self liquidating loan, one in which they will never have to pay back. since the company remains public, it's in the new owners best interest to get the stock price to go up.

position: jpm, and looking seriously at tma leaps