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GREAT WESTERN FINANCIAL CORPORATION
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Q&A REPORT: Answers to Your Merger Hotline Questions
[Great Western Logo]
Wednesday, April 16, 1997 Vol. 1 Number 2
Q&A REPORT is designed to keep employees as fully
informed as possible about merger developments. If your
question does not appear in this issue, please be assured
that it is being researched and will appear in a future
issue.
1. QUESTION:
When can we expect a final decision regarding the merger so that we
can anticipate what happens next? Which way is it leaning: toward
Ahmanson or WAMU?
ANSWER:
In order to merge with Washington Mutual, the merger must be
approved by the stockholders of both Great Western and Washington
Mutual and the Office of Thrift Supervision. Great Western and
Washington Mutual have filed the necessary applications and
documents and are working closely to move forward with the merger.
It is anticipated that the merger will close in the third quarter
of 1997. Great Western remains strongly committed to the merger
with Washington Mutual, but no final decision has yet been made by
the shareholders.
2. QUESTION:
I'd like to know why GW's Board has not entered into discussions
with Ahmanson regarding the merger?
ANSWER:
The Great Western Board has considered the Ahmanson proposal and
other alternatives with its legal and financial advisors and has
decided not to engage in discussions with Ahmanson. The Board has
determined that Washington Mutual is a superior merger partner and
provides a superior value opportunity for stockholders. Great
Western has entered into a definitive merger agreement with
Washington Mutual. Additionally, the Great Western/Washington
Mutual merger will provide greater convenience to our customers and
a wider product array. Also, employees will be part of a strong
organization with great long-term growth potential. There will
also be less branch and administrative overlap than with Ahmanson,
resulting in fewer job losses.
3. QUESTION:
Is there still a chance that Ahmanson could be successful in its
hostile takeover bid even though we have reached an agreement with
WAMU?
ANSWER:
Great Western is committed to the Washington Mutual merger
agreement and is working closely with Washington Mutual toward the
completion of the merger. Apart from that commitment, the company
cannot speculate as to what will happen in the future.
4. QUESTION:
A report by CNBC regarding the merger between Ahmanson and GW
stated that Ahmanson would be the one to take over per, I believe,
a polling of investors. Could you clarify whether or not that is
the truth?
ANSWER:
We have not been able to find any evidence that such a poll was
taken and cannot make any statements regarding its validity.
5. QUESTION:
I saw Ahmanson's full-page ad stating that 19 out of 20 major
stockholders for GW have agreed, in principle, to the Ahmanson
merger rather than the WAMU merger. I wonder if someone could
respond to that.
ANSWER:
By April 11, 1997 Ahmanson had announced that it had delivered to
Great Western consents of a majority of Great Western stockholders
for four out of five Ahmanson's consent proposals. Great Western
has not been able to verify the accuracy of Ahmanson's statements
at this time.
6. QUESTION:
How soon will the employees know which GW branches will be closed
and merged into American Savings branches? When will terminated
employees get a dismissal letter?
ANSWER:
It is still too early to know which branches will be consoli-
dated, or precisely how these decisions will be made. Some
employees affected by a job elimination may receive advance notice,
others may receive their notice and be released on the same day
because no advance notice was possible. Every effort will be made
to give advance notice to terminated employees, but it is still too
early to fully answer this question.
7. QUESTION:
Even though GW and WAMU have agreed to merge, there remains an
outside consulting group in Northridge that is attempting to
justify installing their software and also contemplating staff
reductions. There are two questions: 1) Why would GW be
contemplating entering any contract or commitment to install new
systems at this time? It would appear prudent to first determine
the new partner and jointly discuss a planned approach and then
select the software/system for the enterprise; and 2) If staff
reductions take place, what will be the severance plan offered to
the released employees: the change of control package now on the
table?
ANSWER:
1) Several projects are underway that were approved prior to the
merger announcements. These projects continue to move forward due
to their expected significant economic benefit to the company in
1997 and, therefore, to our merger partner; 2) Yes, Change in
Control benefits are available to eligible employees whose jobs are
eliminated between February 25, 1997 and up to 12 months following
the date of the change in control.
8. QUESTION:
Will our computer systems change to WAMU's computer system or will
we stay on the same COLTS system?
ANSWER:
The underlying system to the COLTS system, the Hogan Integrated
Deposit System, is the same system that Washington Mutual uses,
although WAMU's is a more current version. Until a thorough review
is conducted it is still too early to anticipated what changes may
occur.
9. QUESTION:
If I am laid off and, through the severance package, I am able to
keep the employee rate on my home loan, what happens if I should
die? Will my spouse be able to keep the employee rate or will it
go back to a street rate?
ANSWER:
At the present time, under the current Great Western employee home
loan program, the employee rate will remain in effect as long as
the decedent's spouse continues to occupy the property as his/her
primary residence.
10. QUESTION:
When will I find out if I am going to be laid off?
ANSWER:
It is still too early to know when employees will be affected by
any job eliminations.
11. QUESTION:
I work for GW in the safe deposit area. I have customers asking me
constantly, what will happen to their safe deposit box if we are
moving to another bank; is it safe?
ANSWER:
Our customers' safe deposit boxes will remain safe and intact under
all circumstances. In the event our merger partner makes a
decision to consolidate branch locations, safe deposit boxes always
remain locked during the move. The contents are not distributed
and security is provided to ensure the safety of the boxes while in
transit.
12. QUESTION:
Will the vesting in the 401K with GW stay the same with WAMU?
ANSWER:
Employees will never lose their current vesting. Additional
information regarding 401K benefits information will be provided as
soon as the information is made available.
13. QUESTION:
Do Ahmanson or WAMU own a Consumer Finance company like Norwest or
Associates?
ANSWER:
Neither organization has a free-standing finance company such as
Aristar. Washington Mutual has clearly stated that it views
Aristar as an important player in the merged organization and
intends to operate Aristar in much the same way Great Western has.
Ahmanson has, on previous occasions, openly expressed interest in
either creating or acquiring a free-standing consumer finance
operation.
14. QUESTION:
In the event the outcome is not favorable with WAMU, what would
happen with the Consumer Finance Group?
ANSWER:
Ahmanson does not have an autonomous consumer finance company such
as Aristar. As mentioned above, Ahmanson has expressed an interest
in entering the free-standing consumer finance field.
15. QUESTION:
How do I respond to a customer who is concerned about her account
exceeding the FDIC insurance limits once a merger takes place?
ANSWER:
The FDIC allows for a six month grace period after a merger occurs
before FDIC insurance is affected.
16. QUESTION:
I am a Mortgage Loan Consultant and I want to know what the formal
benefits package will be for insurance, disability and home
mortgages.
ANSWER:
Mortgage Loan Consultants are not eligible for Change in Control
benefits. Benefit information from the acquiring company will be
provided to employees as soon as it is made available.
17. QUESTION:
Is there a chance that temporary employees who have been employed
between 9-11 months at a mid-western GW mortgage office would be
hired full-time?
ANSWER:
All hiring decisions and staffing status changes are made by the
office manager, based on business need.
18. QUESTION:
What are the relocation policies of WAMU and Ahmanson?
ANSWER:
Details regarding the acquiring company's relocation policies will
be communicated to affected employees when necessary and when
available.
If employees have questions about Great Western's merger
developments, you may call the toll-free employee merger telephone
hotline at:
1-888-GW-MERGE
(1-888-496-3743)
This special line is set up for voice mail. Simply ask your
question, which will be recorded, and watch for the answer in a
future issue of Q&A REPORT.
Great Western Financial Corporation ("Great Western") and
the persons named below may be deemed to be participants in the
solicitation of proxies in connection with the merger of Great
Western and Washington Mutual, Inc. ("Washington Mutual") pursuant
to which each outstanding share of Great Western common stock would
be converted into 0.9 shares of Washington Mutual common stock (the
"Merger"). Participants in this solicitation may include the
directors of Great Western (J. F. Montgomery, J. F. Maher, Dr. D.
Alexander, H. F. Christie, S. E. Frank, J. V. Giovenco, F. A. Gryp,
E. Hernandez, Jr., C. D. Miller, Dr. A. E. Siegel and W. B. Wood,
Jr.); the following executive officers of Great Western: J. L.
Erikson, C. F. Geuther, M. M. Pappas, A. W. Schenck III, R. W. Sims
and J. M. Studenmund; and the following other members of management
of Great Western: S. F. Adams, B. F. Antenberg, B. R. Barkley, I.
D. Campbell, C. Coleman, A. D. Meadows and J. A. Trotter
(collectively, the "Great Western Participants"). Messrs.
Montgomery and Maher beneficially own 680,488 shares and 611,762
shares of Great Western common stock, respectively (including
shares subject to stock options exercisable within 60 days). The
remaining Great Western Participants do not beneficially own,
individually or in the aggregate, in excess of 1% of Great
Western's equity securities.
Great Western has retained Goldman, Sachs & Co. ("Goldman
Sachs") and Merrill Lynch & Co. ("Merrill Lynch") to act as its
financial advisors in connection with the Merger, as well as the
merger proposal by H. F. Ahmanson & Company, for which they
received and may receive substantial fees, as well as reimbursement
of reasonable out-of-pocket expenses. In addition, Great Western
has agreed to indemnify Goldman Sachs and Merrill Lynch and certain
related persons against certain liabilities, including certain
liabilities under the federal securities laws, arising out of their
engagement. Each of Goldman Sachs and Merrill Lynch is an
investment banking firm that provides a full range of financial
services for institutional and individual clients. Neither Goldman
Sachs nor Merrill Lynch admits that it or any of its directors,
officers or employees is a "participant" as defined in Schedule 14A
promulgated under the Securities Exchange Act of 1934, as amended,
in the solicitation, or that Schedule 14A requires the disclosure
of certain information concerning Goldman Sachs and Merrill Lynch.
In connection with Goldman Sachs's role as financial advisor to
Great Western, Goldman Sachs and the following investment banking
employees of Goldman Sachs may communicate in person, by telephone
or otherwise with a limited number of institutions, brokers or
other persons who are stockholders of Great Western: J. Wender, J.
Mahoney, A. Gordon, T. Owens and A. Vittorelli. In connection with
Merrill Lynch's role as financial advisor to Great Western, Merrill
Lynch and the following investment banking employees of Merrill
Lynch may communicate in person, by telephone or otherwise with a
limited number of institutions, brokers or other persons who are
stockholders of Great Western: H. Lurie, L. S. Wolfe, P. Wetzel,
F. V. McMahon, J. Esposito, A. Sun, C. Del-Moral Niles and K.
Gupta. In the normal course of their respective businesses Goldman
Sachs and Merrill Lynch regularly buy and sell securities issued by
Great Western and its affiliates ("Great Western Securities") and
Washington Mutual and its affiliates ("Washington Mutual
Securities") for its own account and for the accounts of its
customers, which transactions may result in Goldman Sachs and its
associates and Merrill Lynch and its associates having a net "long"
or net "short" position in Great Western Securities, Washington
Mutual Securities, or option contracts with other derivatives in or
relating to Great Western Securities or Washington Mutual
Securities. As of April 14, 1997, Goldman Sachs had positions in
Great Western Securities and Washington Mutual Securities as
principal as follows: (i) net "long" 7,473 of Great Western's
common shares; (ii) net "long" $1 million of Great Western's
deposit notes; and (iii) net "long" 1,098 of Washington Mutual's
common shares. As of April 14, 1997, Merrill Lynch had positions
in Great Western Securities and Washington Mutual Securities as
principal as follows: (i) net "long" 7,126 of Great Western's
common shares; (ii) net "long 1,600 shares of Great Western's 8.30%
preferred stock; and (iii) net "long" 1,526 of Washington Mutual's
common shares.
Other participants include Washington Mutual and may
include the directors of Washington Mutual (D. P. Beighle, D.
Bonderman, H. M. Bridge, J. T. Crandall, R. H. Eigsti, J. W. Ellis,
D. J. Evans, A. V. Farrell, W. P. Gerberding, K. K. Killinger, S.
B. McKinney, M. K. Murphy, L. H. Pepper, W. G. Reed, Jr. and J. H.
Stever); the following executive officers of Washington Mutual: C.
S. Davis, S. P. Freimuth, L. D. Lannoye, W. A. Longbrake, D. W.
Oppenheimer, C. E. Tall and S. L. Wilson; and the following other
members of management of Washington Mutual: K. Christensen, J.
DeGrande, W. Ehrlich, J. B. Fitzgerald, M. Kittner and D. G.
Wisdorf (collectively, the "Washington Mutual Participants").
Messrs. Bonderman, Crandall and Killinger beneficially owned
1,894,141 shares, 6,549,755 shares and 1,044,224 shares of
Washington Mutual common stock, respectively. The remaining
Washington Mutual Participants do not beneficially own,
individually or in the aggregate, in excess of 1% of Washington
Mutual's equity securities. The Washington Mutual Participants do
not beneficially own, individually or in the aggregate, in excess
of 1% of Great Western's equity securities.
Washington Mutual has retained Lehman Brothers Inc.
("Lehman Brothers") to act as its financial advisor in connection
with the Merger for which it received and may receive substantial
fees as well as reimbursement of reasonable out-of-pocket expenses.
In addition, Washington Mutual has agreed to indemnify Lehman
Brothers and certain related persons against certain liabilities,
including certain liabilities under the federal securities laws,
arising out of its engagement. Lehman Brothers is an investment
banking firm that provides a full range of financial services for
institutional and individual clients. Lehman Brothers does not
admit that it or any of its directors, officers or employees is a
"participant" as defined in Schedule 14A promulgated under the
Securities Exchange Act of 1934, as amended, in the solicitation,
or that Schedule 14A requires the disclosure of certain information
concerning Lehman Brothers. In connection with Lehman Brothers'
role as financial advisor to Washington Mutual, Lehman Brothers and
the following investment banking employees of Lehman Brothers may
communicate in person, by telephone or otherwise with a limited
number of institutions, brokers or other persons who are
stockholders of Washington Mutual and Great Western: S. B.
Wolitzer, P. R. Erlanger, S. Sobti, D. J. Kim, C. P. Sweeney and D.
A. Trznadel. In the normal course of its business Lehman Brothers
regularly buys and sells Washington Mutual Securities and Great
Western Securities for its own account and for the accounts of its
customers, which transactions may result from time to time in
Lehman Brothers and its associates having a net "long" or net
"short" position in Washington Mutual Securities, Great Western
Securities or option contracts with other derivatives in or
relating to Washington Mutual Securities or Great Western
Securities. As of April 14, 1997, Lehman Brothers had positions in
Washington Mutual Securities and Great Western Securities as
principal as follows: (i) net "short" 224 of Washington Mutual's
common shares; (ii) net "long" 27,434 shares of Washington Mutual's
9.12% preferred stock; (iii) net "long" 124,964 shares of
Washington Mutual's 7.60% preferred stock; (iv) net "short" 2,691
of Great Western's common shares; and (v) net "long" 160,000 shares
of Great Western's 8.30% preferred stock.