Hedge fund manager David Tepper writes to Whirlpool: Dilution of company stock damages shareholder value

Gelonghui, February 25 — Hedge fund Appaloosa Management founder David Tepper sent a letter to Whirlpool, accusing its board of destroying shareholder value and calling for a thorough overhaul of its strategy and leadership. Tepper expressed shock over the company’s stock issuance, viewing it as a large and unnecessary dilution of shareholder equity. Whirlpool announced yesterday that it would raise $455 million through a stock offering and an additional $508 million through the issuance of depositary receipts. Tepper stated that the cost of this financing exceeds 10%, which is significantly higher than the company’s after-tax debt cost of less than 5% in the open market, even though management had publicly indicated plans to reduce leverage. As of the end of last year, Whirlpool was the eighth-largest holding in Appaloosa Management’s portfolio, valued at $282 million.