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