Note 15: Subsequent Events

On January 5, 2015, WMIHC, in connection with an offering (the “Offering”) of 600,000 shares of Series B Preferred Stock, filed with the Secretary of State of Washington the Articles of Amendment containing the Certificate of Designation creating the Series B Preferred Stock and designating the rights and preferences of the Series B Preferred Stock.

The foregoing descriptions of the Articles of Amendment and the Certificate of Designation are qualified in their entirety by the provisions of the Articles of Amendment and the Certificate of Designation, filed as Exhibits 3.1 and 4.1 of a Form 8-K on January 5, 2015, respectively, and incorporated by reference herein.

On January 5, 2015, in connection with the Offering and pursuant to that certain Purchase Agreement, dated December 19, 2014 (the “Purchase Agreement”), by and among WMIHC, Citigroup Global Markets Inc. (“Citi”) and KKR Capital Markets LLC (“KCM” and, together with Citi, the “Initial Purchasers”), WMIHC entered into a Registration Rights Agreement with the Initial Purchasers (the “Registration Rights Agreement”), pursuant to which WMIHC has agreed that, subject to certain conditions, WMIHC will use its reasonable efforts to (i) file a shelf registration statement covering resales of common stock issuable upon mandatory conversion of the Series B Preferred Stock pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”) no later than six months after January 5, 2015 (the “Issue Date”); (ii) file a shelf registration statement covering resales of the Series B Preferred Stock pursuant to Rule 415 under the Securities Act no later than one year after the Issue Date; and (iii) cause each of these shelf registration statements to be declared effective under the Securities Act. The Company has agreed to pay customary expenses, subject to certain limitations.

The foregoing description of the Registration Rights Agreement is qualified in its entirety by the provisions of the Registration Rights Agreement, filed on Form 8-K on January 5, 2015, as Exhibit 10.1 and incorporated by reference herein.

On January 5, 2015, in connection with the Offering and pursuant to the Purchase Agreement, WMIHC entered into an Escrow Agreement (the “Escrow Agreement”) with Citibank, N.A., as Escrow Agent (the “Escrow Agent”), pursuant to which WMIHC will cause to be deposited with the Escrow Agent the amount of $598,500,000, representing the proceeds of the Offering less offering fees payable on the Issue Date but before payment of other offering fees and expenses (including fees contingent upon future events). These net proceeds will be released from escrow from time to time to WMIHC as instructed by WMIHC in amounts necessary to (i) pay certain fees related to the Offering that may become payable to the Initial Purchasers, (ii) finance WMIHC’s efforts to explore and/or fund, in whole or in part, acquisitions whether completed or not, including reasonable attorney fees and expenses, accounting expenses, due diligence and financial advisor fees and expenses, (iii) pay certain amounts that may become payable to the holders of the Series B Preferred Stock upon the occurrence of certain put events, (iv) pay certain amounts that would become payable to the holders of the Series B Preferred Stock upon a mandatory redemption of the Series B Preferred Stock, and (v) pay certain expenses related to the Offering. The entire net proceeds will be released from escrow as instructed by WMIHC upon a Qualified Acquisition (as defined in the Escrow Agreement).

The foregoing description of the Escrow Agreement is qualified in its entirety by the provisions of the Escrow Agreement, filed on Form 8-K on January 5, 2015, as Exhibit 10.2 and incorporated by reference herein.

On January 5, 2015, WMIHC entered into an agreement for termination (the “Financing Agreement Termination”) of that certain Financing Agreement, dated as of March 19, 2012, by and among WMIHC, WMI Investment Corp., the lenders party thereto and U.S. Bank National Association, as administrative agent (the “Financing Agreement”). Pursuant to the Financing Agreement Termination, the Financing Agreement automatically terminated on January 5, 2015 and the Company no longer has or will have access to the funds thereunder. As of January 5, 2015, there were no loans outstanding under the Financing Agreement.

The foregoing description of the Financing Agreement Termination is qualified in its entirety by the provisions of the Financing Agreement Termination, filed on Form 8-K on January 5, 2015, as Exhibit 10.3 and incorporated by reference herein.

Pursuant to the Amended and Restated Bylaws of WMIHC (the “Bylaws”), upon termination of the Financing Agreement, Eugene Davis, as the FA Director (as defined in the Bylaws), is required to immediately resign from the Board of Directors of WMIHC. In connection with the execution and delivery of the Financing Agreement Termination, Mr. Davis resigned from the Board on January 5, 2015. Immediately following his resignation, the Board’s Nominating & Corporate Governance Committee recommended to the Board that it reappoint Mr. Davis and the Board reappointed Mr. Davis to fill the vacancy on the Board created by his departure on January 5, 2015. The Board also reappointed Mr. Davis to fill the vacancies created by his departure from the Compensation Committee and the Corporate Strategy and Development Committee. In connection with Mr. Davis’ resignation and immediate reappointment, the Board and the Compensation Committee jointly determined that Mr. Davis’ Board service was not interrupted and constituted “continued service” for purposes of vesting in his outstanding WMIHC restricted stock grants.

On January 5, 2015, in connection with the Offering, WMIHC filed with the Secretary of State of Washington the Articles of Amendment containing the Certificate of Designation, creating the Series B Preferred Stock and designating the rights and preferences of the Series B Preferred Stock.

The foregoing descriptions of the Articles of Amendment and the Certificate of Designation are qualified in their entirety by the provisions of the Articles of Amendment and the Certificate of Designation, filed on Form 8-K on January 5, 2015, as Exhibits 3.1 and 4.1, respectively, and incorporated by reference herein.

On January 5, 2015, WMIHC issued a press release announcing the completion of the Offering. A copy of the press release was filed on Form 8-K on January 5, 2015, as Exhibit 99.1 and is incorporated by reference herein.

The following table reflects pro-forma adjustments recorded on the Company’s December 31, 2014 Balance Sheet to reflect the impact of the Offering and related activities as if it had occurred on December 31, 2014. This pro-forma financial presentation is based on the best estimates currently available of expenses, some of which are contingent upon future events:

WMI HOLDINGS CORP. AND SUBSIDIARIES

CONSOLIDATED PRO_FORMA BALANCE SHEETS

(in thousands, except share data)

	December 31, 2014			Preferred Series B Adjustments				Pro-Forma December 31, 2014
ASSETS
Investments held in trust, at fair value:
Fixed-maturity securities	$	52,578		$	—			$	52,578
Cash equivalents held in trust		11,122			—				11,122
Total investments held in trust		63,700			—				63,700
Cash and cash equivalents		78,009			—				78,009
Fixed-maturity securities, at fair value		8,063			—				8,063
Restricted cash		2,447			598,500		(a)		600,947
Accrued investment income		476			—				476
Deferred offering costs		2,568			(2,568	)	(b)		—
Other assets		876			—				876
Total assets	$	156,139		$	595,932			$	752,071
LIABILITIES, MEZZAINE and SHAREHOLDERS’ EQUITY
Liabilities:
Notes payable - principal	$	31,220		$	—			$	31,220
Notes payable - interest		338			—				338
Losses and loss adjustment reserves		18,947			—				18,947
Losses payable		696			—				696
Unearned premiums		1,094			—				1,094
Accrued ceding commissions		44			—				44
Loss contract fair market value reserve		12,549			—				12,549
Derivative liability - embedded conversion feature		—			66,227		(c)		66,227
Other liabilities		3,021			28,250		(d)		31,271
Total liabilities		67,909			94,477				162,386
Commitments and contingencies
Redeemable and convertible Series B preferred stock, 600,000 shares issued and outstanding		—			501,455		(e)		501,455
Shareholders’ equity:
Convertible Series A preferred stock, $0.00001 par value; 5,000,000 authorized; 1,000,000 and zero shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively		—			—				—
Convertible Series B preferred stock, $0.00001 par value; 5,000,000 authorized; 600,000 and zero shares issued and outstanding as of January 5, 2015 and December 31, 2013, respectively		—			—				—
Common stock, $0.00001 par value; 500,000,000 authorized; 202,343,245 and 201,842,351 shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively		2			—				2
Additional paid-in capital		106,628			—				106,628
Accumulated (deficit)		(18,400	)		—				(18,400	)
Total shareholders’ equity		88,230			—				88,230
Total liabilities mezzanine and shareholders’ equity	$	156,139		$	595,932			$	752,071

The following notes relate to the table above and should be read in conjunction with the information in such table.

(a)	This adjustment is necessary to give effect to the cash deposited into the Escrow account representing the proceeds of the Offering less offering fees payable on the Issue Date but before payment of other offering fees and expenses, some of which are dependent on future events.

(b)	This adjustments is necessary to properly net the deferred offering costs recorded at December 31, 2014 as a reduction of the net mezzanine liability as of the Issue Date.

(c)	This adjustment reflects the valuation of the embedded derivative created by the variable conversion feature of the Series B Offering.

(d)	This adjustment reflects the current estimate of additional offering fees and expenses, some of which are dependent on future events.

(e)	This adjustment reflects the net Series B preferred shares after deducting paid and contingent offering expenses and the value of the embedded derivative described above.

At December 31, 2014, WMIHC held $2.4 million in restricted cash which had been received from WMMRC during the quarter ended December 31, 2014. Prior to this transfer the use of these assets was restricted as described in Note 12: Restriction on Distribution of Net Assets from Subsidiary. This cash was transferred to WMIHC as restricted cash upon approval for distribution by the Insurance Commissioner of the State of Hawaii. On January 6, 2015, WMIHC repaid $2.3 million of principal and $29 thousand of interest relating to the Runoff Notes. At January 6, 2015 (the date of the $2.3 million principal payment), the remaining outstanding balance of First Lien Runoff Notes was reduced to $665 thousand, and Second Lien Runoff Notes principal balance totaled $28.3 million.