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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Sterling investment grows

Wall Street firm Warburg Pincus has $139 million agreement

A Wall Street private equity firm has agreed to invest $139 million in Sterling Financial Corp. as the Spokane bank holding company continues its recapitalization effort.

Warburg Pincus Private Equity X, L.P. would own 20.5 percent of Sterling provided the company raises the $720 million required to satisfy regulators.

Warburg Pincus would own Sterling common stock, preferred stock with voting rights, and warrants.

Warburg Pincus manages more than $30 billion in assets.

Boston-based Thomas H. Lee Partners, which had earlier announced a potential $170 million investment in Sterling, would instead match the Warburg Pincus investment, bringing the two firms’ combined holdings to slightly more than 40 percent of the company.

Both investments, and participation by the U.S. Treasury, are subject to completion of the recapitalization plan, regulatory approvals, stabilization of Sterling assets and capital levels, and other conditions.

Warburg Pincus would be represented on the Sterling board of directors by managing director David Coulter, a former chairman and chief executive officer of BankAmerica Corp. and vice chairman of JP Morgan Chase.

Coulter is the co-head of Warburg Pincus Financial Services investment activities, which encompass holdings in multiple financial institutions.

He would join Scott Jaeckel, a Thomas H. Lee managing director, and new board chairman Les Biller, former vice chairman and operating officer at Wells Fargo.

Although terms of the agreements with Warburg Pincus, Thomas H. Lee and the Treasury presume a price per common share of 20 cents once the recapitalization plan is in place, Sterling shares traded as high as $1 Monday before settling to 87 cents at the close, and 81 cents after hours.

Volume, at 5.4 million shares, was more than four times normal.