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Washington Mutual, the struggling savings and loan, has put itself up for auction, people briefed on the matter said Wednesday.
The unsurprising announcement comes as the bank, which suffered badly from losses on mortgages it had made, continues to stumble. Shares in Washington Mutual fell nearly 10 percent on Wednesday to $2.09; they have plunged 94 percent over the last 12 months. This week alone, investors have been frightened by Standard & Poor’s cutting of the bank’s debt rating to junk.
Major WaMu Holder Agrees to Accept Dilution
A major Washington Mutual investor has waived an agreement that restricted the largest U.S. savings and loan from raising capital, a move that reflects the financial difficulties of the Seattle-based thrift.
TPG, a private equity firm led by David Bonderman, had invested $2 billion earlier this year as part of a $7 billion capital raising by Washington Mutual, which has been battered by mortgage losses.
According to a U.S. Securities and Exchange Commission filing, TPG agreed to waive a provision requiring Washington Mutual to make up any dilution if the thrift raised capital at less than $8.75 per share, about what TPG paid for its stake.
The provision would have kicked in had Washington Mutual raised more than $500 million of equity for less than $8.75 per share, or sold itself for less than that price.
Washington Mutual shares [WM 2.01 -0.31 (-13.36%) ] lost more than 13 percent to close near $2 on the New York Stock Exchange Wednesay. Their 52-week high is $39.25, set last Sept 19.