Banks
Updated from 2:53 p.m. EDT Washington MutualWM shares sank as much as 13% Tuesday after announcing that a consortium of investors led by private equity firm TPG would invest $7 billion into the struggling Seattle thrift. The bank plans a sale of equities to an investment vehicle managed by TPG Capital and other large WaMu shareholders. TPG's investment vehicle will purchase $2 billion of newly-issued WaMu securities. The Fort Worth, Texas-based private equity firm, led by founder and ex-WaMu board member David Bonderman, was rumored to be in discussions with WaMu regarding a capital injection. WaMu also forecast a first-quarter loss and slashed its quarterly dividend once again to 1 cent a share from 15 cents a share. The company said the move will preserve roughly $490 million of capital. WaMu sold approximately 176 million shares of common stock at a purchase price of $8.75 a share. The company also offered 55,000 shares of convertible, perpetual non-cumulative preferred stock at a purchase price and liquidation preference of $100,000 a share. The convertible will convert into common stock at an initial exercise price of $8.75 a share, it said.
Cramer: WaMu Deal Removes a Hazard |
Private-equity firm TPG would receive common and preferred stock in the deal, which would shore up the struggling savings and loan.
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