Washington Mutual Raises $7 Billion – But The Price Is High

April 8, 2008 at 9:09 am  ·  Category: Market Commentary, Stocks

Washington Mutual (WM) announced this morning that they raised $7 billion from private equity firm TPG and other investors, including many of WaMu’s largest institutional shareholders (WM Press Release).

The company sold approximately 176 million shares at $8.75 and 55,000 preferred shares at $100,000 a share, convertible into common stock at $8.75 a share.  What this amounts to is 100% dilution at a price of $8.75 compared to yesterday’s closing price of $13.15.

WaMu also cut their quarterly dividend from 15 cents to 1 cent and announced preliminary 1st quarter results.

Bottom line is that they raised money – but at a high price – and their business is still under substantial pressure.

Washington Mutual shares are off about 10% on heavy volume after being up about 30% yestrerday.

Disclosure: Top Gun has no position in Washington Mutual (WM) shares.

Posted by Greg Feirman  ·  Trackback URL  ·  Link
 

Leave a Comment

Name required
E-mail required, won't be published
Web site