It's fairly similar to the earlier KKR deal, imo.
Previously, KKR purchased convertible preferred stock (known as Series A Preferred) as well as a 5 year warrant of roughly 60 million common shares at approximately $1.38 per share . This preferred stock (series A) can be converted into approximately 10 million shares. In addition KKR was to purchase about $150 million worth of PIK notes. - Total deal if I remember correctly was about $160 million.
Under this new "fund raising" plan, WMIH will be issuing 600,000 shares of Series B Preferred worth $1,000 per share. This will generate an additional $600 million. ($568.7 million after fees)
By purchasing Series B shares, you agree to not exercise or sell your right to the 5 year warrants as well as not convert any Series A into common until March 20, 2015. Pretty much only applies to KKR as they're the only ones that own Series A and the warrants right now.
Like Series A Preferred shares, Series B can (must) be converted into common shares upon closing of an acquisition or if not acquisition date must be converted at the latest July 5, 2018 (this date pretty much only applies if there is not enough outstanding shares to cover the conversion - in which case the the terms of Series B preferred, ie. dividends, still apply). Series B shares also receive a 3% dividend payable quarterly.
Conversion rates are based off conversion price ($2.25) or the average PPS of 20 trading day period, whichever is less. If I remember correctly, no partial shares will be issued.
Ex. Common share 20 day average = $1.80, $1000/1.80 = 555.555; 1 Series B will equal to 555 common shares.
Ex2. Conversion price $2.25, $1000/2.25 = 444.44; 1 Series B will equal to 444 common
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The Company intends to use the net proceeds of the Offering, expected to be approximately $568.7 million, to explore and fund, in whole or in part, acquisitions, whether completed or not, including reasonable attorney fees and expenses, accounting expenses, due diligence and financial advisor fees and expenses.
Total funds available for WMIH use including the credit is now around $800 million.
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