MatlinPatterson to inject $250m into ailing bank Flagstar Bancorp

MatlinPatterson plans to buy from Flagstar 250,000 shares of a new series of convertible participating voting preferred stock. Upon the receipt of stockholder approval to increase the number of authorised shares of Flagstar common stock, the convertible preferred stock will automatically convert into 312,500,000 shares of Flagstar common stock at a conversion price of $0.80 per share.

Thomas Hammond, Flagstar's chairman, and Mark Hammond, Flagstar's vice-chairman, CEO and president, will each invest $2m, and other members of Flagstar management may invest an additional $1m, in each case at the same price per share at which MatlinPatterson is making its investment, according to a statement.

Upon completion, MatlinPatterson will own approximately 70 per cent of Flagstar's fully diluted outstanding equity and will have the right to designate more than a majority of Flagstar's board of directors.

David Matlin, CEO of MatlinPatterson, said, 'Flagstar's leading mortgage origination platform and quality balance sheet present an exciting investment opportunity for us. We are pleased to be partnering with this calibre of management team and look forward to working together and building upon Flagstar's unique franchise.'

Flagstar has $14.2bn in total assets.

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