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The Company and its Subsidiaries | 6 Months Ended
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Jun. 30, 2018
Accounting Policies [Abstract] |
The Company and its Subsidiaries | Note 1: The Company and its Subsidiaries WMIH Corp. WMIH Corp. (“WMIH”) is a corporation duly organized and existing under the laws of the State of Delaware since May 11, 2015. WMIH is the direct parent of WM Mortgage Reinsurance Company, Inc., a Hawaii corporation (“WMMRC”), and, until its dissolution on January 18, 2018, WMI Investment Corp., a Delaware corporation (“WMIIC”). Additionally, WMIH is the direct parent of Wand Merger Corporation, a Delaware corporation (“Merger Sub”). Since emerging from bankruptcy on March 19, 2012 (the “Effective Date”), we have had limited operations other than WMMRC’s legacy reinsurance business, which is being operated in runoff mode. Since the Effective Date, our primary strategic objective has been to identify and consummate one or more acquisitions of an operating business, either through a merger, purchase, business combination or other form of acquisition. To that end, we have continued to seek, identify and evaluate acquisition opportunities of varying sizes across an array of industries for the purpose of facilitating an acquisition by WMIH of one or more operating businesses. Since 2014, in addition to management’s ongoing efforts, WMIH has worked with our strategic partner, an affiliate of KKR & CO. L.P. (together with its affiliates, “KKR”), to identify and evaluate potential acquisition opportunities. On February 12, 2018, WMIH, Merger Sub and Nationstar Mortgage Holdings Inc., a Delaware corporation that is currently listed on the New York Stock Exchange under the ticker symbol “NSM” (“Nationstar”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with and into Nationstar (the “Nationstar Transaction” or the “Merger”), with Nationstar continuing as the surviving corporation and a wholly-owned subsidiary of WMIH. Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Merger Effective Time”) and as a result of the Merger, each share of Nationstar’s common stock issued and outstanding immediately prior to the Merger Effective Time (other than shares owned, directly or indirectly, by Nationstar, WMIH or Merger Sub or by any Nationstar stockholder who properly exercises and perfects appraisal of his, her or its shares under Delaware law) will be converted into the right to receive, at the election of the holder of such share, (i) $18.00 per share in cash, without interest, or (ii) 12.7793 shares of validly issued, fully paid and nonassessable shares of WMIH common stock, par value $0.00001 per share, subject in each case to pro rata cutbacks to the extent cash or stock is oversubscribed (the “Merger Consideration”). The aggregate amount of cash to be paid as Merger Consideration in the Merger is approximately $1.2 billion. On June 29, 2018, the stockholders of each of WMIH and Nationstar approved all proposals relating to the Merger. The closing of the Merger is expected to occur on July 31, 2018 and remains subject to the satisfaction of certain closing conditions. In connection with the Merger, on June 14, 2018, Nationstar Mortgage LLC and Nationstar Capital Corporation, both subsidiaries of Nationstar (the “Existing Note Issuers”), commenced solicitations of consents from holders of the Existing Note Issuers’ 6.500% Senior Notes due 2021 (the “Existing 2021 Notes”) and the Existing Note Issuers’ 6.500% Senior Notes due 2022 (the “Existing 2022 Notes” and, together with the Existing 2021 Notes, the “Existing Notes”) to approve amendments to the indentures governing each of the Existing 2021 Notes (the “Existing 2021 Notes Indenture”) and the Existing 2022 Notes (the “Existing 2022 Notes Indenture” and, together with the Existing 2021 Notes Indenture, the “Existing Indentures” and each, an “ Existing Indenture”) to modify (x) the definition of “Sponsor” in each Existing Indenture to include any of (i) Fortress Investment Group LLC and its Affiliates (as such term is defined in each Existing Indenture) (other than any portfolio company of any of the foregoing) and (ii) KKR and its affiliates, including WMIH and its affiliates (other than any portfolio company of any of the foregoing), and (y) the definition of “Change of Control” (as defined in each Existing Indenture) to provide that the Merger will not constitute a Change of Control under either Existing Indenture. On June 21, 2018, upon receiving the requisite consents from holders of at least a majority of the outstanding aggregate principal amount of each of the Existing 2021 Notes and the Existing 2022 Notes, the Existing Notes Issuers and the guarantors party to each Existing Indenture executed a supplemental indenture with Wells Fargo Bank, National Association (the “Existing Notes Trustee”) to each of the Existing 2021 Notes Indenture and the Existing 2022 Notes Indenture to reflect the amendments. Pursuant to the terms of each supplemental indenture, the amendments to the applicable Existing Indenture became effective on June 21, 2018, but if the Merger is not consummated on or before November 12, 2018 (as such date may be extended pursuant to the Merger Agreement) or if the Merger Agreement is earlier terminated in accordance with its terms, each supplemental indenture provides that the definitions of “Change of Control” and “Sponsor” in the Existing 2021 Notes Indenture and the Existing 2022 Notes Indenture shall revert to the form in effect prior to June 21, 2018. The success of the consent solicitations with respect to the Existing Notes provides the parties the flexibility to continue their obligations under the Existing Notes Indentures following the Merger, without default or without otherwise triggering redemption obligations thereunder. On June 29, 2018, Merger Sub entered into a Note Purchase Agreement with Credit Suisse Securities (USA) LLC, Jefferies LLC, Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., Goldman Sachs & Co. LLC, KKR Capital Markets LLC and Morgan Stanley & Co. LLC pursuant to which Merger Sub issued $1,700,000,000 (the “Offering”) of notes in two series, consisting of $950,000,000 aggregate principal amount of 8.125% Notes due 2023 (the “2023 Notes”) and $750,000,000 aggregate principal amount of 9.125% Notes due 2026 (the “2026 Notes” and, together with the 2023 Notes, the “Notes”). Merger Sub sold the Notes to the initial purchasers in the Offering, which was exempt from the registration requirements of the Securities Act. The Notes were offered for resale to “qualified institutional buyers” as defined in Rule 144A under the Securities Act and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act. On July 13, 2018 the previously announced Offering was consummated. The proceeds from the Offering were deposited into escrow, and upon release in connection with the closing of the Nationstar Transaction, the proceeds from the Offering will be used, together with the issuance of WMIH’s common stock and WMIH’s cash and restricted cash on hand, to consummate the Nationstar Transaction and the refinancing of certain of Nationstar’s existing debt and to pay related fees and expenses or otherwise in accordance with the terms of the escrow agreement, dated as of July 13, 2018, among Merger Sub, Wells Fargo Bank, National Association, as trustee, and Wells Fargo Bank, National Association, as escrow agent. If the Nationstar Transaction is not completed by the earlier of the termination of the Merger Agreement or November 12, 2018, subject to extension pursuant to the terms of the Merger Agreement, the Company will be required to redeem the Notes and the proceeds from the sale of the Notes will be automatically released from escrow and utilized to fund such redemption. Prior to the consummation of the Merger, the Notes will initially be senior obligations of Merger Sub, secured by the escrowed property, and will be fully and unconditionally guaranteed by the Company. Upon the consummation of the Merger, Nationstar will assume all of the Issuer’s obligations under the Notes (the “Assumption”). Following the Assumption, the Notes will be senior unsecured obligations of Merger Sub and will be fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by WMIH and each of Nationstar’s existing and future wholly-owned domestic subsidiaries (other than certain excluded subsidiaries). If we do not consummate the Nationstar Transaction or another Acquisition or Qualified Acquisition (as such terms are defined in our Amended and Restated Certificate of Incorporation (as amended, the “Certificate of Incorporation”)) on or prior to October 5, 2019 (the “Series B Redemption Date”), as such date may be extended in accordance with the provisions of our Certificate of Incorporation, the outstanding shares of WMIH’s 5.00% Series B Convertible Preferred Stock (the “Series B Preferred Stock”) would be required to be redeemed, as more fully described in Note 9: Capital Stock and Derivative Instruments. As of June 30, 2018, WMIH was authorized to issue up to 3,500,000,000 shares of common stock, and up to 10,000,000 shares of preferred stock (in one or more series), in each case with a par value of $0.00001 per share. As of June 30, 2018 and December 31, 2017, 216,664,908 and 206,714,132 shares, respectively, of WMIH’s common stock and 1,000,000 shares of WMIH’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”), were issued and outstanding. As of December 31, 2017, 600,000 shares of WMIH’s 3% Series B Convertible Preferred Stock (the “Original Series B Preferred Stock”) were issued and outstanding. On December 11, 2017, we announced an amendment of the Original Series B Preferred Stock (the “Series B Amendment”), which became automatically effective at 12:00 a.m., New York City time, on January 5, 2018, and effected an exchange of the previously outstanding Original Series B Preferred Stock for shares of Series B Preferred Stock. As of June 30, 2018, 600,000 shares of Series B Preferred Stock were issued and outstanding. WMMRC WMMRC is a wholly-owned subsidiary of WMIH. Prior to August 2008 (at which time WMMRC became a direct subsidiary of Washington Mutual, Inc. (“WMI”), WMMRC was a wholly-owned subsidiary of FA Out-of-State Holdings, Inc., a second-tier subsidiary of Washington Mutual Bank (“WMB”) and third-tier subsidiary of WMI. WMMRC is a pure captive insurance company domiciled in the State of Hawaii. WMMRC was incorporated on February 25, 2000, and received a Certificate of Authority, dated March 2, 2000, from the Insurance Division of the State of Hawaii. WMMRC was originally organized to reinsure private mortgage insurance risk for seven primary mortgage insurers then offering private mortgage insurance on loans originated or purchased by former subsidiaries of WMI. The seven primary mortgage insurers are United Guaranty Residential Insurance Company (“UGRIC”), Genworth Mortgage Insurance Corporation (“GMIC”), Mortgage Guaranty Insurance Corporation (“MGIC”), PMI Mortgage Insurance Company (“PMI”), Radian Guaranty Incorporated (“Radian”), Republic Mortgage Insurance Company (“RMIC”) and Triad Guaranty Insurance Company (“Triad”). Due to the then deteriorating performance in the mortgage guarantee markets and the closure and receivership of WMB, the reinsurance agreements with each of the primary mortgage insurers were terminated or placed into runoff during 2008. The agreements with UGRIC and Triad were placed into runoff effective May 31, 2008. The agreements with all other primary mortgage insurers were placed into runoff effective September 26, 2008. As a result, effective September 26, 2008, WMMRC’s continuing operations consisted solely of the runoff of coverage associated with mortgages placed with the primary mortgage carriers prior to September 26, 2008. In runoff, an insurer generally writes no new business but continues to service its obligations under in force policies and otherwise continues as a licensed insurer. The reinsurance agreements with Triad, PMI, UGRIC and Radian were commuted on August 31, 2009, October 2, 2012, April 3, 2014 and October 23, 2017, respectively, and the related trust assets were distributed in accordance with the commutation agreements. In addition, the RMIC reinsurance agreement was terminated on February 2, 2018, and the remaining trust assets were distributed to WMMRC per the terms of the agreement. On February 13, 2018, the aggregate excess of loss reinsurance agreement between WMMRC and GMIC was terminated in accordance with the terms of the agreement. The underlying trust and the related quota share agreement remain in place. As a result, WMMRC’s current continuing operations consist solely of the runoff of coverage associated with mortgages placed with the following two remaining carriers, GMIC and MGIC. WMIIC WMIIC was dissolved on January 18, 2018. As of December 31, 2017 and the date of its dissolution, WMIIC did not have any operations and was fully eliminated upon consolidation. Merger Sub On February 6, 2018, Merger Sub was formed as a wholly-owned subsidiary of WMIH.

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