Wednesday, September 17, 2008
WaMu Gets Waiver From TPG
This Amendment No. 1 supplements and amends the Schedule 13D filed on July 3, 2008 (the “Original Schedule 13D” and, together with this Amendment No. 1, the “Schedule 13D”) by TPG Advisors VI, Inc., TPG Olympic Advisors, Inc., Mr. David Bonderman and Mr. James G. Coulter with respect to Issuer Common Stock. Capitalized terms used in this Amendment No. 1 and not otherwise defined shall have the same meanings ascribed to them in the Schedule 13D.The clause from the original 13D this summer:
Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer
This Amendment No. 1 supplements and amends Item 6 of the Schedule 13D as set forth below:
The TPG Funds have advised the Issuer that they have waived their rights to the price reset payments provided for under Section 4.11 of the Investment Agreement and Section 13(A) of the Warrant.
Price Reset. In the event that, within 18 months of the closing of the transactions under the Investment Agreement, the Issuer (i) sells more than $500 million of Issuer Common Stock or other equity-linked securities at a per share price less than $8.75, or (ii) the Issuer engages in a change of control transaction wherein the implied value of Issuer Common Stock is less than $8.75 per share, upon the occurrence of each such event the Issuer is required to pay to the TPG Funds an amount sufficient to compensate them for the dilution suffered by the TPG Funds as a result of the above-described transactions.An example of why having good lawyers doesn't always protect you very well. Right now the stock is doodling around around $2.20-$2.25.
On the other hand, they need the waiver to do a merger, I expect. They probably can't get $8.75 a share in stock in a merger.
Out back, FSLIC is cleaning the shotgun. White trash wedding, here we come ...
So the answer is a very large bank that is limited by regulations from expanding on its own, or something like an insurance company that wants ready-made access to money. With capital markets tight, WaMu's retail banking network in an area of the country with a lot of money has a higher relative value.
What happened is that Citi and BofA are both too big to expand much domestically due to legal deposit limitations. Citi went the international route, and is running into some problems. Citi put out a big bond issue in Europe, and just raised a bunch of cash in Japan. I think Citi has now run out of good cash fishing overseas. If I were Citi, I'd be looking at WaMu.
GS is another possibility if it has the cash and can get regulatory approval.
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