bk25
Junior Member
Posts: 112
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Post by bk25 on Oct 14, 2012 5:49:24 GMT -5
Kodak will keep NOL's to reduce future tax liabilities, and would not enter any financing transaction that could risk the use of NOL's. In order to keep the NOL's, Kodak needs make sure that old common shares own at least 50% of the new corporation after the ownership change. So, if they are going to issue more shares for debt financing, they have to make sure that they do not violate this rule. Kodak's creditors may qualify as stakeholder with some restrictions, but no creditor can own more than 5% of the shares of the new corporation. In addition, if this happens, Kodak cannot apply the interest costs of this debt against the NOL's In my opinion, the financing news is actually good for the common shareholders. It clearly confirms that that there is no chance of cancellation of the old common shares. This is a great link about the NOL question: www.nysscpa.org/cpajournal/2007/307/essentials/p52.htm
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Post by Admin on Oct 14, 2012 6:43:51 GMT -5
Good Morning.
Now that is very interesting.
I know they don't want to lose those NOLs.
That makes me feel better that a wipe is NOT coming.
Even still, I don't want dilution and neither does AP.
Good thing APP appears to be very greedy.
SBG
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bk25
Junior Member
Posts: 112
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Post by bk25 on Oct 14, 2012 7:21:00 GMT -5
One other very important NOL tax rule:
The amount of NOL that can be used by the new corporation cannot be more than 4.62% of its market value at the time of the ownership change * 20 years.
So, if the ownership change happens now at 22 cents with market value of $60M, the maximum NOL tne new Kodak may use is $60M*4.62*20 = $55M. So, they would lose the most of the value of $4B NOL's.
It is for benefit of the financing company to have the share price of the old common stock reflect the true value of the new company after financing. Otherwise, they would lose almost all of the NOL's.
Ownership change limits the amount of NOL that can be used, even if the minimum 50% ownership rule is satisfied.
Either the current market value (the price of the old common stock) must increase substantially, or Kodak does not issue new shares, in order not to lose the benefits of the NOL's.
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Post by Admin on Oct 14, 2012 7:26:29 GMT -5
Thanks bk25, and you are 100% sure of this?
If this is true, this is our most important insurance policy of not being wiped!
SBG
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bk25
Junior Member
Posts: 112
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Post by bk25 on Oct 14, 2012 8:40:07 GMT -5
Yes, I am sure. Read section 382 Limitation on the use of NOL's when ownership changes. Here is the link: www.law.cornell.edu/uscode/text/26/382It is clear to me that neither Kodak nor creditor hedge funds benefit from the cancellation of the old common stock at zero value. They lose all of the $4B NOL's. Then, new Kodak's cash flow is reduced significantly, thereby increasing the risk of the new debt payment for the new creditors. If I was the hedge fund manager who is a creditor now, I would re-finance the existing debt for Kodak, without any equity, and buy the common stock in the market, up to 5% ownership limit. Now, they can do it, because the financing news is made public, that means no insider buying. I am sure the hedge funds have already started accumulating the common stock using friendly dealers who are keeping the stock in their inventory. If this is correct, the dealers will manage the stock price for a little longer and then transfer large blocks of shares to hedge funds at agreed prices.
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Post by mikewestveer on Oct 14, 2012 8:44:25 GMT -5
I'm okay with being diluted a small amount if share price shoots up as a result...
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hvapg
Full Member
Posts: 275
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Post by hvapg on Oct 14, 2012 8:49:58 GMT -5
Thanks BK25 for this analysis. I am guessing you are a tax lawyer to dig this up. I has given me hope to continue to hold my shares.
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bk25
Junior Member
Posts: 112
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Post by bk25 on Oct 14, 2012 9:07:42 GMT -5
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Post by busted1964 on Oct 14, 2012 9:18:03 GMT -5
"I am sure the hedge funds have already started accumulating the common stock using friendly dealers who are keeping the stock in their inventory. If this is correct, the dealers will manage the stock price for a little longer and then transfer large blocks of shares to hedge funds at agreed prices."
Is this a common practice or it your guess?
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Post by joefarina on Oct 14, 2012 10:29:46 GMT -5
Busted, wall street is capable of things beyond your imagination.
Crooked thieves and manipulating liars. It's called GREED and CORRUPTION. Kinda like politics.
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Post by Marriott on Oct 14, 2012 10:30:18 GMT -5
" I am sure the hedge funds have already started accumulating the common stock using friendly dealers who are keeping the stock in their inventory. If this is correct, the dealers will manage the stock price for a little longer and then transfer large blocks of shares to hedge funds at agreed prices. " bk25 : Excellent post ! If hedge funds have started to accumulate common, this is a very good omen for us longs ! Long and stronger !
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bk25
Junior Member
Posts: 112
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Post by bk25 on Oct 14, 2012 11:35:07 GMT -5
Kodak has only three options regarding new financing and keeping the NOL’s.
1. Kodak will not select 382(1)(5) under Chapter 11 code, because if it did it would have asked for injunction against any bankruptcy post-petition trading in debt that would prevent the 382(1)(5) election. The creditors must hold the debt for at least 18 months before the bankruptcy and debt instruments should not be acquired by new vulture funds. In addition, although all of NOL’s (minus debtor interest) can be used, a second ownership within two years following the first ownership change, will eliminate all NOL’s.
2. Kodak will not select 382(1)(6) under Chapter 11 code , because the Section 382 limitation will then apply to NOL’s. The 382 limitation will be computed as the lesser value of the value of US assets (bankrupt entity) before the ownership change and the value of the stock immediately after the ownership change. This results loss of most of NOL’s if the new debt-to-equity financing is small ($500M-$600M), as this amount will be added to the market value of common shares immediately before the ownership change (currently $60m).
3. Kodak will not select section 382 limitation by opting out of the Chapter 11 ownership change, because, then the 382 limitation on NOL’s will be computed as the value of its stock immediately before the ownership change. Using the stock price at 22 cents, the 382 limitation caps the $4B NOL’s at $55M for total future tax deductions.
In conclusion, I do not see Kodak doing a debt/equity swap and lose most of the NOL’s for a new $500M-$600M financing. They may issue warrants to the new creditors at a much higher share price, or do a convertible deal again at a much higher share price.
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Post by micgrow on Oct 14, 2012 11:38:13 GMT -5
I would like to hear Arctics view on this topic
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Post by Admin on Oct 14, 2012 11:40:14 GMT -5
Why is that?
You miss getting lied to?
He is working on it right now, trying to figure out how to spin it, give him another hour or so.
All of this is being forwarded to my accountant BTW.
SBG
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Post by newyorkled2008 on Oct 14, 2012 11:53:35 GMT -5
Why is that? You miss getting lied to? He is working on it right now, trying to figure out how to spin it, give him another hour or so. All of this is being forwarded to my accountant BTW. SBG Would love to hear what your Accountant has to say about this all SBG. Thanks!
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Post by micgrow on Oct 14, 2012 12:21:15 GMT -5
Why is that? You miss getting lied to? He is working on it right now, trying to figure out how to spin it, give him another hour or so. All of this is being forwarded to my accountant BTW. SBG :/ some call it withdraw.... go ahead... judge me...
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Post by arcticfox on Oct 14, 2012 13:33:28 GMT -5
Why is that? You miss getting lied to? He is working on it right now, trying to figure out how to spin it, give him another hour or so. All of this is being forwarded to my accountant BTW. SBG I don't have time to write about the complicated NOL issue today. But portions of the relevant data and facts have been presented already on the old yahoo board over the course of several months. I do agree that a single comprehensive post containing all the relevant facts and analysis needs to be written specifically to address the NOL vs share cancellation issue. There are too many misconceptions out there on the subject. I will see if I can tackle the subject over the next few days. Your shares aren't getting cancelled this week so....No hurry right? BTW SBG, I slightly took offense in your comment. Do you honestly think I've ever lied to you? How many times in the past 3 weeks alone have you read something I posted and thought it was a lie at first glance... only to found out that the truth is that you have been mislead by Pro or others to begin with? Remember the discussion about number of shares BOD own? Do not diss someone who is trying to help you out of pure frustration. I expect more from you SBG.
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Post by joefarina on Oct 14, 2012 13:36:56 GMT -5
psychological warfare SBG.....that is farticks specialty.
He would make a great Jim Jones.....
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Post by ryanngina on Oct 14, 2012 14:30:27 GMT -5
all i know is wamu is still being traded even today because of the nol's,even though it's not much more than a shell of the company as far as we shate holderes r consurnrd,yet ek will still be in full blown operation whwn exicting bk,with my ex. with wamu i beleive the commins will be fine,with i'd say definately some dilution,but who wouldnt take a 5 for 1 rev.slit for a 5$ per share price tag???and no these r just #'s grabbed out of the air showing that delution would'nt be all bad
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Post by Admin on Oct 14, 2012 18:20:52 GMT -5
Jackasses on Yahoo saying that the NOLS can be preserved regardless if the common were canceled and New shares issued.
Is this correct?
Apparently this info came from Roger, he doesn't know his ass from a glory hole, so we need to be sure he is wrong.
SBG
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Post by goarmy on Oct 14, 2012 18:24:26 GMT -5
Kodak will keep NOL's to reduce future tax liabilities, and would not enter any financing transaction that could risk the use of NOL's. In order to keep the NOL's, Kodak needs make sure that old common shares own at least 50% of the new corporation after the ownership change. So, if they are going to issue more shares for debt financing, they have to make sure that they do not violate this rule. Kodak's creditors may qualify as stakeholder with some restrictions, but no creditor can own more than 5% of the shares of the new corporation. In addition, if this happens, Kodak cannot apply the interest costs of this debt against the NOL's In my opinion, the financing news is actually good for the common shareholders. It clearly confirms that that there is no chance of cancellation of the old common shares.This is a great link about the NOL question: www.nysscpa.org/cpajournal/2007/307/essentials/p52.htm
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Post by Admin on Oct 14, 2012 18:27:38 GMT -5
Hi goarmy,
Yes, saw that from earlier today, but wanted to be sure it was true.
SBG
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Post by littlefred747 on Oct 14, 2012 19:40:49 GMT -5
Kodak will keep NOL's to reduce future tax liabilities, and would not enter any financing transaction that could risk the use of NOL's. In order to keep the NOL's, Kodak needs make sure that old common shares own at least 50% of the new corporation after the ownership change. So, if they are going to issue more shares for debt financing, they have to make sure that they do not violate this rule. Kodak's creditors may qualify as stakeholder with some restrictions, but no creditor can own more than 5% of the shares of the new corporation. In addition, if this happens, Kodak cannot apply the interest costs of this debt against the NOL's In my opinion, the financing news is actually good for the common shareholders. It clearly confirms that that there is no chance of cancellation of the old common shares. This is a great link about the NOL question: www.nysscpa.org/cpajournal/2007/307/essentials/p52.htmBK25...haven't seen you around these parts much...what you have brought here today is very much appreciated..! Keep coming back!
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bk25
Junior Member
Posts: 112
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Post by bk25 on Oct 14, 2012 20:17:04 GMT -5
There is no way Kodak can get around the minimum of 50% ownership after ownership change rule with a $600M debt/equity swap without keeping the old common shares holding a substantial share of the ownership.
The debt/equity swap has to be for $2B or more to cancel the old common shares.
Even if Kodak and debt holder hedge funds invented a way to get around the rules, they run the risk of the cancellation of all of NOL's by the IRS.
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Post by psalmchapter51 on Oct 14, 2012 20:49:00 GMT -5
BK, thanks for this post. This is very promising.
That said, Kodak will either need a return to profitability, or to receive significant proceeds from an asset sale(s), for net loss carry forwards to have any value, right.
It is very good to hear that existing common has 4 BIL in NOLs as an insurance policy, but IMO we still need an asset sale.
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Post by joefarina on Oct 14, 2012 20:58:40 GMT -5
Both coming to a theatre near you...........look for all to be extra beautiful guys
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Post by logik360 on Oct 14, 2012 22:04:20 GMT -5
RE: Potential benefits of NOLs: acquire tax benefits under the 'guise' of a patent purchase. Obviously for the example below, the benefits were two-fold, but it serves as a good example for those believing that a buyout is imminent. Motorola deal offers Google tax, patent benefits"The tax benefits of the deal make what was a good deal into a great deal," said Robert Willens, a New York accounting and tax expert. He estimated that through the acquisition, Google can expect to reap $700 million a year in tax deductions from future profits each year through 2019. Google also will be able to immediately reduce its taxes by $1 billion due to Motorola Mobility's U.S. net operating loss, and by a further $700 million due to its foreign operating loss, he said.These are deductions which Motorola Mobility has been unable to use because of a faltering business that has failed to generate the revenue against which to offset them. The deductions include those for research and development, tax losses in the United States and abroad, and credits carried over.The article continues... The IRS kept a separate rule saying that a company could not acquire another company primarily for its tax benefits -- something Willens said Google was not doing, even as it benefited from the tax component of the acquisition.www.reuters.com/article/2011/08/31/us-motorolamobility-google-tax-idUSTRE77U1QX20110831
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Post by plees on Oct 15, 2012 0:03:10 GMT -5
Amazing ...will research nol
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Post by plees on Oct 15, 2012 0:04:13 GMT -5
Delete lucky off board he's pushing topic of nol lower from the discussion
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Post by psalmchapter51 on Oct 15, 2012 20:14:15 GMT -5
bump for additional feedback concerning common`s most valuable insurance policy.
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