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Originally published April 17, 2008 at 12:00 AM | Page modified April 17, 2008 at 1:00 AM

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Filing reveals top WaMu investors pumped $7.2B into ailing bank

Washington Mutual disclosed Wednesday that three of its largest institutional investors are among the group that pumped $7.2 billion of new capital...

Seattle Times business reporter

Washington Mutual disclosed Wednesday that three of its largest institutional investors are among the group that pumped $7.2 billion of new capital into the ailing thrift.

In a Securities and Exchange Commission filing, WaMu also disclosed part of the price for that cash infusion: It agreed to pay TPG, the private-equity firm that led the massive investment, $50 million to reimburse it for deal-related expenses.

For its part TPG, which ultimately will become WaMu's largest single shareholder with a 16.1 percent stake, agreed not to buy any more shares or to try to take control of the Seattle-based company without the approval of WaMu's board.

Wednesday's filing represented the next step in the complex deal, in which WaMu sold shares of common and preferred stock and warrants for common stock, raising much-needed capital as it strives to navigate its way through the housing slump and credit-market turmoil.

At a special, yet to be scheduled meeting, shareholders will be asked to permit the members of the investment group to convert their preferred stock and warrants into common stock, and increase the cap on WaMu's outstanding stock to enable them to do so. If TPG, based in Fort Worth, Texas, and the other investors fully convert their preferred stock and warrants into WaMu common stock, they will end up with just over 50 percent of the company.

Besides TPG, Capital Research Global Investors of Los Angeles will wind up with a 9 percent stake; Hotchkis and Wiley Capital Management of Los Angeles 6 percent; and Brandes Investment Partners of San Diego 4.8 percent.

Other members of the investment group remain unidentified. WaMu also agreed to protect the TPG-led group from having its stakes diluted if, within 18 months, the company either raises more cash or sells itself for less per share than what the group members paid.

Drew DeSilver: 206-464-3145

Copyright © 2008 The Seattle Times Company

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