Washington Mutual will get a $5 billion investment from TPG and other investors. TPG is expected to get one seat on the company's current 14-member board.
TPG's effort could be viewed as an encouraging sign for the nation's ailing banking system, and Wall Street will be watching to see whether it is an indication that the worst is over. It comes as virtually every large mortgage company in the country has hit financial distress. Countrywide Financial Corp. had to seek an emergency sale to Bank of America Corp. earlier this year, while others have gone bust amid mortgage losses.
Still, an investment could expose TPG and its partners to a financial hit if the mortgage-market shakeout continues.
While banking regulators were likely apprised of WaMu's plans, the government was not directly involved in forging a deal as in the recent purchase of Bear Stearns Cos., say people familiar with the matter.
As currently envisioned, the $5 billion investment would be structured as both a common- and preferred-stock offering. The preferred stock could be converted into common shares in the future, subject to a shareholder vote. TPG -- formerly Texas Pacific Group -- is expected to maintain a "substantial minority holding" in WaMu, said one person familiar with the matter, though exact terms weren't clear. The amount is expected to fall under 25%, a threshold that would require TPG to register as a financial holding company under government rules.
....
But relatively cheap investments aren't a guarantee for success, either. For example, private-equity firm Warburg Pincus agreed in December to purchase $500 million of the stock of bond insurer MBIA Inc. at $31 a share. The stock closed Friday at $13.61.
And there is the remaining question of whether a $5 billion investment will be enough to cover all the thrift's capital requirements in the future, especially if the mortgage-backed-securities market continues to deteriorate.
http://online.wsj.com/article/SB120753199958893909.html?mod=hps_us_whats_news
No comments:
Post a Comment