The investor group that led a $7 billion capital injection into struggling Washington Mutual Inc. in April waived its right Wednesday to extra compensation should the thrift company try to raise more capital or pursue a sale.
Wamu, badly bruised by mortgage losses, has posted three straight quarterly losses. After ousting long-time chief executive Kerry Killinger and replacing him last week with Alan Fishman, sources close to the company said Wamu began a search for a buyer late last week.
"Our goal is to maximize [Wamu's] flexibility in this difficult market environment," TPG Inc, a private equity firm led by David Bonderman, said in a regulator filing Wednesday.
In the filing with the Securities and Exchange Commission, TPG said it agreed to waive a provision requiring Wamu to make up any dilution TPG would have suffered had Wamu raised more than $500 million in capital — or sold itself — at less than $8.75 per share, roughly what TPG paid for its $2 billion stake in April.
A source said Wednesday that Mr. Fishman met this week with Federal Deposit Insurance Corp. officials, who urged the Wamu CEO to find a buyer. JPMorgan Chase & Co., which has eyed ways to expand in Florida and California, two states where Wamu has large retail networks, is the most likely buyer, this source said.
A Wamu spokesman was not immediately available for comment.
Wamu's stock, already down more than 60% this year, was punished Wednesday, closing down 13%, to $2.01 a share.
Moody's Investors Service and Standard & Poor's ratings service have each lowered their ratings for Wamu to "junk" status, citing capital concerns.
Last week, Wamu said it would set aside $4.5 billion for loan losses in the third quarter. It has projected that it will lose as much as $19 billion on bad loans between summer 2007 and 2011.