>Can anyone come up with the numbers for how calgz will go to 20-30 based on the positive ruling?
The initial reaction to the win appears to be somewhat muted due to massive profit taking. We must remember that the Supreme Court has not decided the issue of damages. These cases could drag on for up to two years as the lower courts decide upon damages. CALGZ was supn off to holders of CAL so there are a lot of investors with samll holdings. These shares are probably being bought up by arbs. and institutions who have a longer timeframe.
The Math.
I'm not sure about how much damages CalFed is asking for but Fortune Magazine has stated that CALGZ has the maximum potential to reach aprox. 30. Barron's has also come out with a similar figure. Naturally, this all depends on the ultimate damages ruling that CalFed recieves. I would expect CALGZ to rally in the coming days but who knows? It's possible that that gov't will settle these calims before it is decided once and for all by the courts.
This is from CalFed's 1995 annual report:
GOODWILL LITIGATION
In February 1992, the Bank commenced litigation against the United Statesin the U.S. Court of Claims (now the U.S. Court of Federal Claims, the "ClaimsCourt") seeking to recover the value of its supervisory goodwill. The suit alleges that the treatment of such goodwill mandated by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA")constitutes a breach of contract between the Bank and the United States and an unlawful taking of property by the United States without just compensation or
due process in violation of the U.S. Constitution.
In two decisions, on April 21, 1992 and July 24, 1992, the Claims Court ruled on three of the eighteen pending suits presenting claims similar to those presented by the Bank's case. The court ruled that the plaintiffs had an enforceable contractual right to treat supervisory goodwill as an asset and to amortize it over a specified period of years, and that the federal government breached that contractual right when it enacted FIRREA. The court further held
that the federal government was not immune from liability under vario us defenses. The court, as part of its second ruling, consolidated the three cases and certified its rulings to the U.S. Court of Appeals for the Federal Circuit on interlocutory appeal. During the second quarter of 1993, the U.S. Court of Appeals reversed the ruling of the Claims Court. The plaintiffs filed a petition for a rehearing before all the judges of the U.S. Court of Appeals ("en banc"), which was granted, and the earlier decision was vacated.
On August 30, 1995, the United States Court of Appeals for the Federal Circuit issued its en banc opinion for the consolidated cases, Winstar Corporation, United Federal Savings Bank, Statesman Savings Holding Corp., the Statesman Group, Inc. and American Life and Casualty Insurance Company, and Glendale Federal Bank, FSB v the United States, No. 92-5164 ("Winstar"), which affirmed the decisions of the Claims Court granting summary judgment to plaintiffs Winstar Corporation and United Federal Savings Bank (Winstar, No. 90-8C), Statesman Savings Holding Corporation, the Statesman Group Incorporated and American Life and Casualty Company (Statesman, No. 90-773C), and Glendale Federal Bank, FSB (Glendale, No. 90-772C) (together, the "Winstar cases") on the liability portion of their breach of contract claims against the United States. The Court of Appeals held that the government breached certain implied-in-fact and express contracts when Congress enacted FIRREA.
During the third quarter of 1995, the Bank distributed to its common shareholders its Contingent Litigation Recovery Participation Interests, entitling the holders thereof to receive an amount equal to up to 25.377745 percent of the cash payment, if any, actually received by the Bank pursuant to a final, nonappealable judgment in or final settlement of its claim against the United States in the lawsuit, California Federal Bank v. United States, Civil Action No. 92-138C (the "Litigation"). The Bank's shareholders of record on July 14, 1995 received one Participation Interest for every ten shares of common stock owned on the record date. The Participation Interests were
distributed on July 28, 1995 and began trading on the NASDAQ Small Cap Market under the symbol "CALGZ" on August 1, 1995. In the Litigation, the Bank alleges that the United States breached certain contractual commitments regarding the computation of its regulatory capital and deprived the Bank of certain of its property without just compensation in violation of the United States constitution. The Bank's claims arose from changes, mandated by FIRREA, with respect to the rules for computing the Bank's regulatory capital. The Litigation is currently stayed pending the resolution on appeal of the Winstar cases which present issues similar to those presented by the Litigation.
Although the decision of the en banc Court of Appeals has been rendered, no assurance can be given as to when the stay of the Litigation will be lifted. Furthermore, the government petitioned for a writ of certiorari from the U.S. Supreme Court, which the Court granted on January 19, 1996. There can be no assurances that the plaintiff thrift institutions will prevail before the U.S. Supreme Court. In addition, even if the plaintiff thrift institutions in the Winstar cases prevail in a final, nonappealable judgment, a court may
still determine that the Bank's claims involve sufficiently different facts and/or legal issues as to render the Winstar cases inapplicable to the Litigation and thereby result in a different conclusion from that of the Winstar cases."
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