Characterizing WMI Holdings (WMIH +1.7%) as a "KKR special purpose acquisition vehicle," hedge funder Stephen Errico, thinks the P-E firm will move ahead with acquisitions which can utilize WMI's nearly $6B in tax loss carryforwards.
WMIH is more than a double since KKR in December announced plans for a strategic investment in the firm, and last month closed on the purchase of convertible stock, committed to buying a chunk of subordinated debt, and received 5-year warrants to purchase common stock.
"Expect acquisitions to be announced sooner rather than later," says Errico, calling WMIH a small cap, speculative way to invest alongside KKR.
KKR yesterday purchased about $11M (face value) of convertible preferred stock in WMI Holdings (WMIH) and committed to the purchase of another $150M of subordinated 7.5% PIK notes. The P-E firm also received 5-year warrants to purchase about 61.4M common shares - with half struck at $1.32 per share, and the other half at $1.43.
KKR also has the right to take down up to 50% of any equity offerings up to $1B in the next three years. KKR's stake in the WMI can't go higher than 42.5%.
WMI Holdings (WMIH +28.2%) - formerly WaMu and now in the business of managing the lender's legacy reinsurance business - gets its downside capped after KKR agrees to invest about $160M in the company at prices from $1.10-$1.43 per share.
S&L giant Washington Mutual (WAMUQ.PK) finally gets the go-ahead to exit bankruptcy proceedings after more than three years of brutal legal battles. The plan calls for ~$7B to be distributed to creditors and includes significant recoveries for shareholders, who often are left with nothing in bankruptcy cases. WaMu's assets were sold to JPMorgan Chase (JPM +1%) in 2008.
WaMu reached a deal yesterday with preferred shareholders, and will now get the approval from creditors that it needs to exit bankruptcy. To sweeten the deal, WaMu increased preferred shareholders' stake in the reorganized post-bankruptcy company to 75% from 70%.
Federal criminal investigations into failed mortgage lenders IndyMac Bancorp and New Century Financial have reportedly stalled, although New York recently opened its own probe into IndyMac. In addition, the Justice Department has closed an investigation to Washington Mutual (WAMUQ.PK) after it was dormant for over a year.
Former WaMu (WAMUQ.PK) CEO Kerry Killinger and two other execs have broken off settlement talks with the FDIC, and have filed to dismiss an FDIC lawsuit seeking to recover $900M for their role in the biggest bank failure in U.S. history.
A nice read for those feeling a bit helpless against too-big-to-fails: about the scruffy-bearded "hipster" ex-programmer (and WaMu (WAMUQ.PK) investor) who headed to Delaware bankruptcy court, caught a judge's ear, and changed the case's course. Suspecting big buys of trust preferreds were being done by hedge funds, he became a fly in the hedgies' ointment and helped usher in a settlement with small investors.
Washington Mutual (WAMUQ.PK) inches closer to exiting bankruptcy after reaching a deal to quiet shareholder protests over its $7B exit plan. It won't be a bank anymore; it'll be primarily a vehicle for tax breaks. The tentative pact gives shareholders equity in a reorganized WaMu that may be positioned to take advantage of $5B worth of tax breaks.
A swap of securities into preferred stock on the eve of Washington Mutual's (WAMUQ.PK) seizure is the basis for a lawsuit by holders of $1B of the securities against WaMu and JPMorgan Chase (JPM). Plaintiffs want the swaps undone, and a determination that JPMorgan knew about misrepresentations and can't be a bona fide purchaser of the securities.
JPMorgan Chase (JPM) abandons its demand for a $1.4B refund in exchange for a bigger upfront share of a Washington Mutual (WAMUQ.PK) bankruptcy settlement, hoping the concession may break a stalemate with WaMu bondholders and the FDIC.
Bankrupt Washington Mutual (WAMUQ.PK) settles with JPMorgan Chase (JPM) and the FDIC, saying it's pleased with "substantial recoveries" for creditors and that it's been vindicated for its positions in the case.