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Wednesday, September 17, 2008

WaMu Gets Waiver From TPG

TPG had a stipulation that WaMu would have to pay it for raising substantial additional capital (thus diluting TPG's interest). WaMu SEC Filing saying TPG waives it:
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.

Item 6.
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.
The clause from the original 13D this summer:
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.

Who do they dream is going to invest in WaMu?

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 ...
John - well, the reason BofA wanted CW was probably that there was no other way for them to expand. There are provisions limiting how much of the nation's deposits any one bank can have.

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.
And for the likely match, see CR's coverage on another topic.

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.
Yeah, not long after I commented, I saw the CR post. WaMu claims to have enough capital to live to 2010 at their current burn rate, but I don't see that lasting now that the general populace is aware of their troubles.
Yeah. Morning drive-time radio snarks were making book on WaMu being the next to fail. Including rumors and snarks that if you have any money in WaMu, pull it out NOW...

1929, anyone?
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