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Washington Mutual (WMI) - Project Fillmore (Decapitalization of WMB fsb)

Washington Mutual (WMI) - Project Fillmore (Decapitalization of WMB fsb)

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Published by meischer
"We propose to decapitalize WMBfsb by returning $20 billion of capital to its parent. The $20 billion will include the master note of approximately $7 billion, proceeds from $3.5 billion of Discount Notes and cash generated through additional wholesale deposits and advances from FHLB Seattle. We propose the payment of at least $10 billion by September 30, 2008 and the remaining $10 billion through December 2009."

"The net balance sheet of WMBfsb will be approximately $34 billion to $36 billion after Project Fillmore. The leverage ratio will decrease to 25% from 62%. A well-capitalized institution requires an 8% or higher leverage ratio."
"We propose to decapitalize WMBfsb by returning $20 billion of capital to its parent. The $20 billion will include the master note of approximately $7 billion, proceeds from $3.5 billion of Discount Notes and cash generated through additional wholesale deposits and advances from FHLB Seattle. We propose the payment of at least $10 billion by September 30, 2008 and the remaining $10 billion through December 2009."

"The net balance sheet of WMBfsb will be approximately $34 billion to $36 billion after Project Fillmore. The leverage ratio will decrease to 25% from 62%. A well-capitalized institution requires an 8% or higher leverage ratio."

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Categories:Business/Law
Published by: meischer on Sep 25, 2011
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B51
;).
WM: ConIidcntial Limited Access
WASIDNGTON MUTUAL BANK
Board of Directors MeetiDg MiDutes
April
1, 2008
The Board
of
Directors
of
Washington Mutual Bank (the "Bank") met concurrently
with
the Board
of
Directors
of
Washington Mutual, Inc.
(the·
"Holding Company")
on
April
1,
2008,
for a telephonic meeting.Directors Present:Stephen
I.
ChazenAnne
V.
FarrellStephen
E.
Frank
Kerry
K.
KillingerThomas
C. Leppert
Charles
M.
LillisPhillip D. MatthewsDirectors Absent: NoneManagement Present:Todd Baker
Carey
M.
BrennanThomas
W.
CaseyRonald J. CathcartDarylD.DavidStewart
M.
LandefeldJohn McMurrayJohn RobinsonStephen J. Rotella
Robert
J. WilliamsCraig
E.
TallSusan
R.
TaylorRegina
T.
Montoya
Michael
K.
MurphyMargaret Osmer McQuadeMaryE.PughWilliam
G.
Reed
Orin
C.
SmithJames
H.
SteverAdvisors Present:Frank Cicero,
of
Lehman BrothersPhil Erlanger,
of
Lehman BrothersHuntley Garriott,
of
Goldman SachsJohn Mahoney,
of
Goldman Sachs
Lee
Meyerson,
of
Simpson ThacherTodd Owens,
of
Goldman SachsSteve Wolitzer,
of
Lehman Brothers
Materials Redacted
Docfl176424
;)
WM:
Ita t 
WASINGTON MUTUAL
BAK
Board of Diecto Meetig MiutApril 1,

he Bo of Diectos of Wahgo Muta
B 
(te 
"B
 mt co ty

e Bod of Detos of Washgto M, I. he  ·"Holdg Compay) o Ap 1
00,
fo a tpoc mtgDtos Pset:Sthe I Caz n e 
V
F ellSteph E FKey K Klg om C LCls M LPpD MawsDto Abst Noe Mamt Pstodd B Caey M Beom W CyRoad J CtDlDDavidtew M Lafe oh McMyo Robso tephe J Rotea Ro J Wlsg Taus R Tayo Re T Motoy M  MhyM Osm MQade MyPgWl
G.
ReedO C SmtJe H Steve AvPsetFa Cco of Lehm BesPhlg, of Le BHutey ro of Gom SaJo Moey, of G hs

Meyeo, of Sp T Todd

 of Go ShsSteve Wol, o Le Bt
Materals Redacted
 
 
B52
WM:
Confidential Limited AccessMr. Killinger presided and called the meeting to order at 4:00 p.m. Pacific Daylight Timeand the undersigned served as secretary to the meeting. All those present attended themeeting
by
telephone (management and
Mr.
Killinger being together at the offices
of
theHolding Company) and could hear each other during the meeting. All attendees werepresent at the beginning
of
the meeting, except for
Mr.
Tall and the advisors from
Lehman
Brothers and Goldman Sachs who joined later.
Materials Redacted
Minutes
from
the
Board
Meeting
on
March
17 and the Informational Briefings on
March
14
and
March
25
Mr.
Killinger submitted the minutes
of
the March
17
Board meeting and the March
14
and March
25
informational briefings.
On
motion duly made and seconded, the Boardunanimously approved the minutes.Messrs. Garriott, Mahoney and Owens, from Goldman Sachs, and Messrs. Cicero,Erlanger and Wolitzer from Lehman Brothers then joined the meeting.
Doc #176424
2
WM: Confdetial Limt
AccsMr. Kllinge pided nd cld th min to odr at
4
 pm Paci Dayi Tim d  derind rv
cetry o th mng A to en tnded h mein b ephone (magemn d
.
iine in other at he oe of theHodn Compy) d od h ea othe dn te me atendee weereen at e inin of te me xep o

a d the advo om

Bohr d Godman Sah o joe ar
Mateals Reacte
Minutes from he Boad
Mg
on ac
1
ad he Ifomationl
Brefn
on M
1
nd Mach

Kge utd e mnut o e Mh
7
Bod mng d th Mh

 d Mh
25
ioton n
O
 oon dy mde d ondd, e odanimo apod th mintM Gro Mony nd On o odn Sc nd M cro,Enr
ad Woltzr
ro Ln othr hn jn  min
 
2
 
B53
WM: Confidential Limited AccessReview
of
Consolidated ReportsMessrs. Casey, McMurray, Williams and Rotella submitted reports on the financialcondition
of
the Holding Company and its subsidiaries, including the Bank, on aconsolidated basis, including information responsive to questions and requests raisedpreviously
by
the Board. The reports included information on financial results, assetquality, liquidity and capital.Investment
Hanken'
PresentationMr. Mahoney
of
Goldman Sachs, and
Mr.
Cicero
of
Lehman Brothers, jointly presentedmaterial previously provided to the Board
.entitl~
~.'Coirlidenti~
~entation
toOlympic's Board
of
Directors."
Mr.
Mahoney
began
the presentation by briefly reporting
that
three bids had been received from private
equity
firms interested
in
purchasingequity securities from the Holding Company, and
that
conversations were underway
with
institutional investors. One financial institution
had
submitted a bid to purchase theHolding Company and its subsidiaries, including the Bank. The presentation byinvestment bankers included information on the various capital raising proposals, theproposal to purchase
the
Holding Company and the overall capital raising process. Amore detailed description
of
the presentation
is
set forth
in
the minutes
of
the HoldingCompany.Issues Related to
Capital
Raise -
Shareholder
Approval
Mr. Meyerson presented information on the form
of
equity securities to
be
offered by the
}.I
Holding Company and the various regulatory and legal steps that would need to be taken,including obtaining approval by the Holding Company's shareholders.Executive Session
At
6:20 p.m.,
Mr.
Killinger asked that the meeting go into executive session. Allmembers
of
management left the meeting
at
this time. other
than
Messrs. David,Landefeld. Rotella and Killinger.
Mr.
Meyerson also remained.
Mr.
David thensubmitted his presentation on compensation issues related to the recapitalization plan andprovided information in response to an earlier request from the Board reviewingexecutive management's economic incentives to pursue the different strategicalternatives. After answering questions from the Board, Messrs. David and Rotella leftthe meeting. The Board then engaged
in
a thorough discussion regarding the HoldingCompany's financial condition and the relative merits
of
the different strategic andfinancial alternatives for the Holding Company under the circumstances. The Board fullydiscussed the pros and cons
of
raising different amounts
of
capital. Messrs. Killinger,Landefeld and Meyerson responded to numerous questions, including questions posedpreviousfy, such as the difference between the fees that would be earned by theinvestment bankers for raising capital as opposed to entering into a merger agreement.Mr. Meyerson responded
to
a question regarding the Holding Company's ability
to
buyback stock in the future. Messrs. Wolitzer and Erlanger rejoined the meeting to respondto additional questions, including a question about what other institutions might also beseeking capital and how much information about the Holding Company would beprovided to the "wall crossed" institutional investors as compared to private equity firms.
Doc
11176424
3
WM: Condeta
Lm
Access
Rvw o Conodatd
Rport
essrs. Cy, McMay Wlls nd Roel submted res o he ccondton o te oldng Copy  s subsidiaries, includng te Bank o  
osolae
 sis, includg nfoati rsnsve  quesons and reques raise  revosly y e Bod. Te ros ncuded foo o nci ss, asse
q
 qudty d capal.
nvtmt Hak' Pntatio 
r ahny of Golma Sach d

Ccero  Lehm Bthers, jny resen terl prvusly proid to he Bar e� e enao tOlymc's Board of irec"

 Mey g e t y ey r
 td ha e rei

 prvate eq s nerese 
 cheqy res om e Holdg Comy, d
cvn  deay
 
itoal investor
On
nanci o
sumte a   h hldn Cmy d is subside cludn h Bk.
T
 pseo yinveset anke includ foao n he v ci sn s, he sa t urche
Holdng Comy  e ov cai s e
mo ele descripo of e psen
se oh  he mute of he ldin ompy
 Rlatd to
Caital
Ra -Saod 
Aroval

 Meyeo resented nfoo 
e
o f ty se   er y he
} 
HldingCom pay andthe vaos r  gu  tod ests  wuld ne to b ke ,
icludin oini g ap roval byth e HlngCmy's shrehlde.
Exctiv
Sson
A
6
 .m

nge k a e mg  n execuve sesso
l
mem of magemen le he meeg
s ie ohe 
 Mes. Dd,deeld otell d Kling

eyers al mane
.
Davd esued hs presentation on mo ises relte to the rtaltio l   povd   resnse t  le eques m e Bod reengeuve management's onomc cenves  pse he de sec teves. Aer 
wg 
queson om he Bard

Dad  otell lee meen.
T
Board then engag
  thorough discusson gdn he Hldgompy's ncal condto d he relve met of the deren sategc dnci
eves
for 
h
oldng Cmpy unde the cisances e Board lydscused e pros d cos of rasng deret  of cat ess lge,andefeld 
yro respe
 to
umero
queson, cudng queson s
 prevoufy
sch s
he ece 
bewen te fs
ha wo
d be eed by the
vstmn 
bkers for 
rsg pta
 
oppose o enrg 
nto a
mrgr agreem

Meerso rspone o
a
questo regarg th 
e oldg
ompy's
blty  uy
bck stock  t ur. essrs.
olzer d
Erger rejo h meng to
rspond
to onal uestos, ncug  queso bout wh oer nons
gt aso be
sekg captl an o uch noato ou 
e
Holg ompy ou
b
pv
o
h
"
w
 
l
crosse" istuto
nesos s
compare o prve equy 
r
 

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