I am new to this board and doing some research. I ran across the Schedule 13D filed by TPG Capital. In this filing they give details of their agreement with WAMU when WAMU issued shares to them for cash.
This agreement has the following anti-dillution text:
----------------------------------------------------------- Anti-Dilution Provisions. If prior to the date that is 18 months after the date of issuance of the Warrants, (i) the Issuer issues or sells, or agrees to issue or sell, more than $500 million of equity or equity-linked securities, other than certain permitted issuances, for consideration per share less than the Applicable Price (as defined below), or (ii) there occurs any Fundamental Change (as defined below) relating to the Issuer in which the price of the underlying security is less than the Applicable Price, then the exercise price of the Warrants in effect immediately prior to each such issuance or sale will immediately be reduced to the price of the securities in such issuance, sale or Fundamental Change, as applicable. In that event, the number of shares of Issuer Common Stock issuable upon the exercise of the Warrants will be increased to the number obtained by dividing (x) the product of (1) the number of shares of Issuer Common Stock issuable upon the exercise of the Warrants before that adjustment and (2) the exercise price in effect immediately prior to the issuance, sale or Fundamental Change giving rise to this adjustment, by (y) the new exercise price determined in accordance with the immediately preceding sentence. “Applicable Price” means the greater of (A) the greater of the market price per share of outstanding Issuer Common Stock on (i) the date on which the Issuer issues or sells any Issuer Common Stock and (ii) the first date of the announcement of such issuance, sale or Fundamental Change and (B) $8.75. The exercise price is also subject to customary anti-dilution adjustments. ---------------------------------------------------------
If I read this right, since TPG Capital has warrants for 57,142,857 shares at an exercise price of $8.75, and there was effectively a "Fundamental Change" event (i.e. seizure and sale by FDIC), the section above seems to say that TPG Capital would have a right to
(57,142,857 * 8.75)/.10 = 4,999,999,987 Shares at exercise price of .10??? (assuming .10 pps right after FDIC announcement)
The real question then becomes how does chapter 11 process impact this agreement and the warrants?
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