Ishbia postpones secondary offering of UWM stock after price falls

An entity controlled by UWM Holdings Chairman and CEO Mat Ishbia has reversed course and postponed its planned secondary stock offering as the company's stock price took a beating.

After the market closed on Nov. 16, UWM announced that SFS Holding, its controlling shareholder, planned to sell 50 million shares of Class A stock. At the same time, UWM would repurchase $100 million of SFS' equity interest — which are convertible on a one-for-one basis into shares of Class A Common Stock — at a price per share equal to what the secondary offering’s underwriter would have purchased the shares. This stock repurchase was part of UWM's $300 million planned buyback program.

The aim of the secondary sale was to increase the public float of UWM Holdings by approximately 50%, creating liquidity in its stock to attract the interest of larger indexes and institutional investors. Also, the concurrent buyback would have reduced the number of shares outstanding without decreasing the public float.

"As the principal owner of SFS, I was willing to sell a percentage of our ownership in UWM at less than what I think to be fair value because we were advised that increased float in the public market would be beneficial for the UWMC shareholders, including its largest shareholder, SFS," Ishbia said in a press release. "Unfortunately, while there was more than enough demand from potential investors, the overall market conditions were such that the prices offered were not at levels that I will entertain."

Through SFS, Ishbia controls 94% of the equity of UWM Holdings.

As an alternative, UWM is accelerating the buyback program now, and will look to increase the public float at a later date, the release said.

Besides the stock sale, UWM also announced a debt offering prior to the market opening on Nov. 15. That morning, UWM's common stock opened trading at $6.96 per share and closed later that day at $6.85.

The following day, it opened at $6.84 and ended 23 cents per share lower at $6.61. That night the SFS offering was disclosed, and while UWM opened Nov. 17 at $6.57 per share, by the end of the trading day it was down to $5.95.

UWM's opening on Nov. 18 was six cents per share higher than the previous close at $6.01. But the slide resumed, and at one point, the stock price hit a 52-week low at $5.41 per share, before going back up to $5.52.

That night SFS pulled the plug and investors responded immediately, with UWM opening on Nov. 19 at $6.69 per share, up $1.17.

"I believe, both as the CEO of UWM and the controlling shareholder of UWMC, that the company is poised for even better performance in the upcoming quarters," Ishbia said. "We will be aggressive with utilizing our remaining buyback authorization at these prices and if the market returns to a reasonable level, SFS will be willing to do its part by providing availability to increase the public float, but the terms have to make sense, and doing a deal today at these levels did not make sense to me."