SEATTLE--(BUSINESS WIRE)--Dec. 23, 2002--Washington Mutual, Inc.
(NYSE:WM) announced today that it is notifying The Bank of New York as
escrow agent requesting the release of 18 million shares of Washington
Mutual common stock and approximately $85 million in cash from an
escrow agreement established as part of the company's acquisition of
American Savings Bank (ASB) in 1996.
The escrow account was scheduled to terminate on Dec. 20, 2002.
When Washington Mutual acquired American Savings Bank from
Keystone Holdings Partners, L.P. and the Federal Deposit Insurance
Corporation (FDIC) as manager of the FSLIC Resolution Fund, it placed
8 million shares of Washington Mutual common stock in an escrow
account. Prior to the Dec. 20 termination date, Keystone and the FDIC
had contingent rights to receive all or part of the escrowed shares
(which have increased since 1996 due to stock splits), plus
accumulated dividends and interest.
The ultimate number of shares and cash to be released from escrow
would be based on the amount of net cash proceeds Washington Mutual
would receive from a settlement -- or final, non-appealable money
judgment -- resulting from Keystone's 1992 lawsuit against the federal
government for breach of contract. The Keystone lawsuit was one among
many such "goodwill" lawsuits filed by thrift institutions against the
federal government in that period. In order for the maximum number of
shares in the escrow to be released, Washington Mutual would have to
receive net cash proceeds, before taxes, from any settlement or
judgment of approximately $516 million.
The shares in the escrow account are currently not included in
either primary or fully diluted shares for purposes of computing
Washington Mutual's earnings per share.
Washington Mutual has been advised that the FDIC has requested
that the escrow agent not release the shares and cash therein because,
in the FDIC's opinion, conditions for an extension of the escrow
account for up to four years were satisfied by a summary judgment
establishing the liability of the federal government for breach of
contract. The plaintiffs received that judgment earlier this year.
In order to facilitate discussions among the parties, David
Bonderman and J. Taylor Crandall, two Washington Mutual outside
directors who are affiliated with Keystone Holdings Partners, L.P. and
who have a financial interest in this matter, have resigned as
directors of Washington Mutual effective immediately. The company
thanked them for their dedicated years of service to Washington Mutual
and the board. Washington Mutual does not anticipate filling their
Discussions are now taking place between the parties to determine
whether they can resolve their differences.
With a history dating back to 1889, Washington Mutual (NYSE:WM) is
a national financial services company that provides a diversified line
of products and services to consumers and small- to mid-sized
businesses. At Sept. 30, 2002, Washington Mutual and its subsidiaries
had consolidated assets of $262.61 billion. Washington Mutual
currently operates more than 2,500 consumer banking, mortgage lending,
commercial banking, consumer finance and financial services offices
throughout the nation.
||Washington Mutual (Media)
||Alan Gulick, 206/377-3637
||Washington Mutual (Investor Relations)
||JoAnn DeGrande, 206/461-3186
||Ruthanne King, 206/461-6421