Washington Mutual (NYSE: WM) has outlined its details of a financial aid or rescue finance package.  The company is raising a total of $7 Billion via direct stock sales to an investment vehicle managed by TPG Capital, which includes others and existing top institutional holders.  Unfortunately, this is more of a takeunder financing and more similar to past rights offerings than anything.

TPG as the anchor will buy $2 Billion in newly issued securities.  Outside of this, it is issuing 176 million shares at $8.75 and 55,000 contingently convertible perpetual non-cumulative preferred stock at a purchase price and liquidation preference of $100,000.00 per share; and that convertible preferred has an exercise price of $8.75 per share.

In order to save cash, it will slash its $0.15 dividend down to $0.01 in an effort to save $490 million annually.

Washington Mutual will also post a net loss of approximately $1.1 billion, or -$1.40 EPS.  On top of that it has loan loss provisions of $3.5 Billion and net charge-offs of $1.4 Billion.

Goldman, Sachs & Co. and Lehman Brothers served as placement agents.  WaMu shares closed up big yesterday at $13.15, and shares are listing lower by almost 12% at $11.58 in pre-market trading.

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Jon C. Ogg
April 8, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at [email protected] and he does not own securities in the companies he covers.

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