After reading this PR, I sold my position and bought a few puts at the end of the day. I figured somebody knew something considering Wamu should have been up in anticipation of the bailout passing, instead what I saw was heavy selling that tested the 52 week low...
Posted by: MWM Date: Thursday, September 25, 2008 3:39:38 PM In reply to: earlylight who wrote msg# 172091 Post # of 172212
Good reason not to hold over night, I sold mine and took a loss after reading the common shares might get wiped out...
WaMu reportedly seeking a rescue by private equitySacramento Business Journal
Washington Mutual Inc. has approached several private equity firms as it seeks to find a buyer, according to Thursday’s Wall Street Journal.
Regulators are also looking to find a buyer for the Seattle thrift weighed down by billions in troubled mortgages.
Private equity firms reported to be considering a deal include Carlyle Group and Blackstone Group. If a deal emerges, the two firms are expected to team up with Texas billionaire Gerald Ford, who did well investing in Golden State Bancorp, a California thrift that Citigroup (NYSE: C) acquired for $5.8 billion in 2002.
Such a sale could wipe out WaMu’s existing common stockholders, including TPG Capital, which led a $7 billion financing for WaMu earlier this year, the newspaper reported.
WaMu is also working on other fronts to try to accomplish a sale of the company.
The Wall Street Journal said the number of potential buyers is narrowing, with Spain’s Banco Santander pulling out and Toronto-Dominion Bank of Canada expressing lackluster interest. Wells Fargo (NYSE: WFC), J.P. Morgan Chase (NYSE: JPM) and Citigroup have conducted due diligence but are concerned about taking on WaMu’s substantial loan problems.
That could require the Federal Deposit Insurance Corp. to declare WaMu a failed institution and then sell the branches, deposits and other good assets to an acquiring bank while holding onto WaMu’s troubled loans and other bad assets. One analyst estimates a WaMu failure could cost the FDIC $24 billion.
Chase is seen as a strong contender for WaMu’s branch network, given the New York bank’s desire to expand its retail banking franchise.
Standard & Poor’s this week lowered WaMu’s debt ratings further into junk territory “due to the increased likelihood that a potential sale of the company may not involve the whole company, which increases the risk of default for holding company creditors.”
WaMu operates more than $300 billion in assets and has more than 2,200 branches. It’s among the largest financial institutions in California.
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