Going Public with a Tax Twist: Can Investors Take a Page from KKR’s Playbook? – IPO Edge
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Going Public with a Tax Twist: Can Investors Take a Page from KKR’s Playbook?
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Going Public with a Tax Twist: Can Investors Take a Page from KKR’s Playbook?

Shell Company Myrexis Has $100 Million in Net Operating Losses That a Profitable Business May Use

Market turmoil and the government shutdown were just the latest reasons for the fickle IPO market to freeze. That may prompt bankers to get more creative with ways to bring companies public.

Consider the case of Mr. Cooper Group, a $1.4 billion Nasdaq-listed mortgage servicer. The company evolved into its current state last year when Nationstar Mortgage Holdings merged with defunct bank Washington Mutual’s parent company, WMIH, which was backed by KKR as a major shareholder.

A key reason for the merger was that WMIH was sitting on a whopping $6 billion in net operating loss (NOL) carry forwards. While not of much use to WMIH, those NOLs are extremely valuable to a profitable business like Mr. Cooper.

More NOL shells exist and some may offer deep value to investors with high risk appetite. One example is Myrexis (ticker: MYRX), which wound down operations several years ago and has since stopped producing SEC filings but continues to trade. According to a recent article on Seeking Alpha, it has $100 million of NOLs, worth about $1 per share, and is seeking a deal partner. Yet the stock has largely been forgotten, trading below $0.05 a share recently.

There’s also a connection between Mr. Cooper and Myrexis. According to the most recent SEC filings from Myrexis, Steven D. Scheiwe joined its board in 2013. Mr. Scheiwe also was the chairman of the board at WMIH and remains on the board of Mr. Cooper. He didn’t respond to an email seeking comment from IPO Edge. Jonathan Couchman, CEO of Myrexis, also did not respond to requests for comment.

 

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