Mike Willingham:
But many of you stuck with us during the rough and tumble battles over the last 4.5 years. Legal skirmishes ...covering the formation of the EC itself. Contentious litigations over plans of reorganization that did not anticipate any recovery for equity shareholders and ultimately a GSA that provides for a recovery this company, our company, as we distributed to its equity holders.
As you know as the fact that the company’s equity holders realize any recovery in this case is somewhat unique and that outcome was not even considered likely, some would even say possible, at various stages of the Chapter 11 proceedings. And many of you were there. But your representatives on the EC persevered and successfully negotiated on behalf of the shareholders of this company. As a result, we obtained the following: reorganized company, $75 million cash to recapitalize the company, $125 senior credit facility to support the company’s acquisition strategy, $10 million in priority payments with respect to the runoff notes issued by the company upon emergence, and approximately $5.9 billion dollars’ worth of NOLs.
I would first like to thank the members of the EC for achieving this result. Since emergence, our primary strategy has been to resume normal company operations including compliance with our SEC reporting obligations, begin paying off the runoff notes as required by the indentures, and pursuing acquisitions. To that end, the first 4 weeks following emergence, we formed a corporate strategy and development committee. Pursuant to its charter, this committee was tasked with, among other things, developing strategies for future acquisitions and identifying potential acquisitions and investment opportunities. This committee has worked very hard and we have held numerous meetings to advance our primary strategic initiative. As has been previously disclosed, the company engaged Blackstone Advisory department to assist the company in developing and executing on this strategic objective. I am sure you can appreciate as a public company, there’s not a lot I can say on this particular subject. On behalf of the company’s directors and officers, thank you for steadfast for this organization, particularly as…strategic opportunity in an effort to deliver value to you, our shareholders.
To date, our company has achieved a number of significant milestones including distributing 6.5 billion to parties in interest as we emerged from bankruptcy. Retaining Blackstone to assist us with identifying and evaluations of strategic business opportunities. Resuming periodic reporting to the SEC is a big undertaking…file 10K and Q during bankruptcy, big process. Receiving a clean audit on the company’s financial status, including with respect to the ?…first since 2008. Managing WMRRC runoff….resulted in company receiving approximately $30 million that was used to repay a substantial portion on the company’s runoff notes. Reducing the original outstanding principal amount of the first year runoff notes by 11% and rebuilding our management team and restoring operations and functionality. I assure you that the board and management team are committed to executing on the company’s business strategy in a prudent and strategic manner. We look forward to continuing this journey with you. Once again, I express our deep appreciation for your ongoing support. I will now turn it over to Tim Jager, our company’s interim CFO, for our financial report.
Tim Jaeger:
Thank you Mike and good morning. Echoing Mike, I would like to express my thanks to you for attending our first post-emergence annual meeting. I also would like to thank you for the opportunity to address you, our shareholders.
I will provide some highlights of the company’s accomplishment and focus since our emergence from bankruptcy. It has been a busy and productive period of time since our emergence in March 2012. We have continued to focus our efforts on a few key areas relative to the financial reporting.
These include:
• Timely filing of required reports with the SEC
• Ongoing monthly reporting required under our debt facilities and indentures
• Implementing new financials controls to the company to maintain our compliance with the requirements that are required due to our status as an accelerated filer
• Ongoing support of our wholly owned subsidiary WMRRC
• Monitoring of our liquidity position
• Critical estimated relayed for financial reporting.
I will also address our key financial items.
Some of the details of the timely filing of required reports follows. Since emergence, we have filed our post-emergence form 8K and our related amendments on form 8Ka to report our opening balance sheet. Our initial form 10Q with quarter ending June 30 2012. Additional form 10Q for the quarters ending Sept 30 2012 and March 31 2013. Our initial form 10K for December 2012 and ongoing other required reports to the SEC. To some, these may seem routine, but the company’s post-emergence financial statements are more complicated than one might expected given the application of FRESH START accounting principles and other factors. That said, we have timely filed these SEC reports and we continue to develop and enhance the company’s financial reporting framework, processes, and procedures.
Implementing new controls in compliance of requirements. As an accelerated filer, we are required to have an independent registered public accountant firm reported on our controls for financial reporting. Consequently, we implemented controls which are relevant to the company’s post-emergence facts and circumstances. We worked with an outside vendor to develop and test our control environment and I’m pleased to report that we received a report from our auditors stating we maintained in all material respects effective internal control for financial reporting. Currently, our business activities are through our wholly owned subsidiary WMRRC. As disclosed in our public filings, WMRRC is operating in runoff mode and consequently is expected to experience decreasing revenues and expenses. The cash flow that are generated through WMRRC is the sole source of funds to pay interest and principal on the runoff notes we issued coming out of bankruptcy.
The company’s liquidity position is an important factor that we monitor closely. Given the company’s primary strategic objective of growing through one or a series of acquisitions, we maintained liquidity which we believe is a balanced mix of cash, short-term and long-term investments, in order to provide the company with the ability to move quickly if the business opportunity present itself. There are several areas of our financial statements which are based on future events. The most significant of these relate to loss reserves and the underlying valuation of the WMRRC reinsurance contracts. We continue to enhance our methods of correcting these estimates utilizing, amongst other reports, tools, 3rd party advisors, updated models as appropriate to identify and address new trends that may affect these financial metrics.
The key financial highlights that I wanted to focus on today are as follows:
We have recorded significant NOLs carry-forward valued at approximately 5.97 billion dollars. Although today, we have fully (cant understand) , and therefore have not been privy to any net financial value to this. I will refer you to form 10K and 10Q for additional details and risk factors identified in our SEC filings relating to the NOLs. Since emergence through March 31, 2013, we have incurred net losses totaling 16.2 million. During the same period of time, we incurred 17.7 million interest expense on the runoff notes which were issued in conjunction with our emergence from bankruptcy. The interest on runoff notes is only paid with cash available from runoff distributions from WMRRC. From our emergence from bankruptcy through March 31, 2013, we have reduced the runoff notes from 130 million to 115.7 million. The principal reduction of 14.3 million resulted from repayments totaling 23.3 million ?net with interest, issuance of notes totaling 9 million?. As disclosed, subsequent events for the period ending March 31, 2013 we have received an additional 2 million dollars from WMRRC which will be used to pay principal and interest on the runoff notes.
