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Wilshire Bancorp Inc. Message Board

  • cohsgrad cohsgrad May 10, 2011 10:36 PM Flag

    DTA & Section 382

    I did a back of the envelope calculation of how many shares they could issue before triggering limitations on the use of the Tax Net Operating Loss Carryfoward.

    First, the good news, the preferred stock issued under TARP does not appear to impact the 50% ownership trigger. I didn't look into it closely and am basing this statement on the following:

    http://www.mwe.com/index.cfm/fuseaction/publications.nldetail/object_id/23472616-fe2c-4264-8fbf-a5f1dea05486.cfm

    Second, the good or bad news, they had roughly 29 million outstanding common shares for the last three years. If they issue more than 29 million in the stock issuance I think they will be triggering the loss limitation rules unless there is some exception I am not aware of. So I would say they are stupid, or I am missing something (which very well might be the case) if they issue more than 29 million shares. If you take $115 million ($100 million + $15 million overallotment) and divide it by 29 million shares you get around $4 a share.

    Like I said, I could be missing something, but we have one of the following on our hands:

    1) They are kissing a large chunk of their DTA goodbye on a permenant basis by issuing more than 29 million shares unless my understanding of §382 is wrong.
    2) Market messed up in driving share price down as they plan to issue shares around $3.90-$4.00 range.
    3) Number of shares issued is actually less than $100 million.

    Please excuse any errors in spelling as I'm not particularly good at English and it is past my bedtime!

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