Magazine article American Banker

Wamu Makes Tender Offer to Boost Bank United Deal

Magazine article American Banker

Wamu Makes Tender Offer to Boost Bank United Deal

Article excerpt

Washington Mutual Inc., which expects to close its $1.5 billion purchase of Bank United Corp. this quarter, has made a tender offer for all of Bank United's preferred stock to simplify the Houston thrift company's capital structure.

Washington Mutual wants to expand in one of the country's fastest-growing states by acquiring Bank United, the fifth-largest banking institution in Texas. The thrift companies are alike in their focus on residential mortgage lending and low-fee consumer checking accounts, but Bank United's balance sheet is riskier, in large part because of its growing exposure to out-of-state commercial real estate loans.

Moody's Investors Service has kept its rating on the Texas thrift to noninvestment-grade status since the Wamu deal was announced in August, and Standard & Poor's has kept it two notches above noninvestment-grade.

Meanwhile, Moody's rating on Washington Mutual's senior unsecured debt is A3, and the Standard & Poor's rating is BBB+, both investment-grade.

"We're trying to position Washington Mutual in the best financial structure prior to the merger," said JoAnn DeGrande, first vice president of investor relations at the Seattle thrift.

Bank United's preferred stock had been issued before the announcement of the Wamu deal in two series at relatively steep rates -- 3.42 million shares at 10.12% and four million at 9.6%. Wamu may not need to raise more capital, but if it does, it would not require such high rates, Ms. …

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