Washington Mutual To Receive $5 Billion

Seattle-headquartered Washington Mutual Inc. is close to reaching a deal that would see private equity firm TPG and other investors inject $5 billion of capital into the company, the Wall Street Journal reports.

The investment is expected to be structured as both a common- and preferred-stock offering, which could be converted to common shares at a later date, subject to shareholder vote. This plan would at least temporarily eliminate the possibility that WaMu will be acquired by J.P. Morgan Chase & Co. or another large financial institution. A preliminary offer was said to have been made recently, but discussions were subsequently stopped.

In the fourth quarter of 2007, WaMu reported a $1.87 billion loss attributed to a dramatic increase in the reserve for loan-related losses. ‘Having parlayed the country's housing boom to a nationwide reputation and immense profits, it is now paying dearly for delving into subprime mortgages,’ the Wall Street Journal article notes.

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