Reuters: Bankruptcy News: UPDATE 2-Washington Mutual plans to come back to life

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UPDATE 2-Washington Mutual plans to come back to life Jul 19th 2012, 22:57 Thu Jul 19, 2012 6:57pm EDT By Paritosh Bansal July 19 (Reuters) - The remnants of Washington Mutual Inc, the biggest U.S. bank to fail, has hired Blackstone Group LP to advise it on how to grow -- possibly in a business other than banking. In an unusual step, WMI Holdings, the parent company of the failed bank, is considering buying companies or starting businesses using a $125 million credit facility, "substantial cash" and advice from the Wall Street private equity company. WMI has not decided what it would buy and the target may not be a financial services company, sources familiar with the situation said. The idea is to find a good management team and a profitable operating business that can be grown, the sources said, adding that the process was still in the initial stages. One attraction for the company is its net operating liabilities, or NOLs, which can be used to reduce the tax bill for a profitable business, the source said. But for that WMI would have to be the buyer, as NOLs do not carry over if the company that holds them is acquired, the source said. "It could create a lot of value to buy a business," the source said. Based in Seattle, Washington Mutual was 119 years old when regulators seized it on Sept. 25, 2008, at the height of the financial crisis. With $307 billion in assets, it was one of the biggest corporate casualties of the crisis, alongside Lehman Brothers Holdings and Bear Sterns, and remains the largest U.S. bank or thrift to fail. Regulators arranged the immediate sale of the main banking operations, known as WaMu, to JPMorgan Chase & Co for $1.88 billion. Washington Mutual's holding company filed for bankruptcy protection the next day. The company exited bankruptcy in March, after nearly three and a half years of court battles. Blackstone had served as an adviser to the company during its Chapter 11 proceedings. The assets of WMI Holdings include a unit that is winding down a Washington Mutual reinsurance business. Link this Share this Digg this Email Reprints

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