UWM Holdings Inc. (NASDAQ: UWMC) stock declined by 7.23% at last close whereas the UWMC stock price gained by 22.83% in the pre-market trading session. UWM is the nation’s top wholesale mortgage lender, issuing loans exclusively through the wholesale channel.
UWMC stock’ Update
The previously discussed secondary offering of Class A Common Stock and concurrent stock repurchase by UWM Holdings Corporation has been cancelled, starting today. The Offering was designed to boost UWMC’s public float by roughly 50%, making the stock more liquid and marketable for larger indexes and institutional investors. Simultaneously, the Company’s buyback authorization will be used to decrease the number of fully diluted shares outstanding.
The market’s response to the Offering, on the other hand, led to a share price level at which SFS is unwilling to sell. SFS will not be selling any shares of common stock at this time due to the cancellation of the Offering. Rather, the company aims to accelerate its previously disclosed buyback programme and postpone ambitions to enhance the public float until later.
Mat Ishbia, the Company’s Chairman and CEO commented that,
He was ready to sell a portion of SFS’s stake in UWM for less than what he believes is fair value as the company’s major owner. It’s because they were told that more float in the public market would benefit UWMC shareholders, particularly SFS, the company’s largest stakeholder. He was also open to having SFS sell new shares to the Company at the same time while at the same price to fulfil their buyback pledge and decrease the number of outstanding shares without lowering the public float. Sadly, while there was plenty of interest from possible investors, the general market conditions meant that the prices set were not at levels he would consider acceptable.
He further added,
In both the third quarter and in previous quarters, they are extremely pleased with their financial and operational accomplishments. He believes that the Company is on track to deliver even stronger results in the future quarters. At these prices, they will be proactive in using their remaining buyback authority, and if the market returns to a decent level, SFS will be willing to help raise the public float by offering availability. However, the terms must be reasonable, and cutting a deal today at these levels did not seem reasonable to him.