Ailing Flagstar Bancorp, Inc. (FBC) announced Thursday that it has entered into an investment agreement with MatlinPatterson Thrift Investments LP, in which MatlinPatterson will inject $250 million in Flagstar, taking a 70-percent stake in the Troy, Mich.-based bank. News of the investment comes two days after Flagstar said its shares could be delisted from the New York Stock Exchange, according to an MSN report, because its closing price sat at less than $1 per share for 30 consecutive days. The MatlinPatterson affiliate will purchase from Flagstar 250,000 shares of a new series of convertible preferred stock, according to a press statement by the firms. Upon stockholder approval to increase the number of authorized shares of Flagstar common stock, the convertible preferred stock will automatically convert into 312,500,000 shares of Flagstar common stock at a conversion price of $0.80 per share -- which equates to a premium of about 33 percent over the closing price of Flagstar's common stock on December 17, 2008. At the closing of the investment, Thomas Hammond, Flagstar's chairman, and Mark Hammond, Flagstar's vice-chairman, CEO and president, will each invest $2 million, and other members of Flagstar management may invest an additional $1 million, in each case at the same price per share at which MatlinPatterson is making its investment. Upon the completion of its investment, MatlinPatterson will have the right to designate more than a majority of Flagstar's Board of Directors, as it will have the majority of ownership. While the New York Stock Exchange generally requires stockholder approval prior to the issuance of securities representing 20 percent of the outstanding shares of a listed company, due to the time-sensitive financial viability of the company, the audit committee of Flagstar's Board of Directors has approved the investment, and the full board of directors has concurred, Flagstar said. "Given the difficulties in the capital and residential real estate markets, we continue to aim to operate at capital levels in excess of our historical norms... We believe that this transaction is a necessary step in meeting these goals," said Hammond. MatlinPatterson also put up $1.35 billion earlier in March to rescue ailing super-jumbo lender Thornburg Mortgage, a move that kept the lender out out of bankruptcy after it was unable to resolve a string of recent margin calls; Thornburg, however, continues to struggle mightily. Write to Kelly Curran at Disclosure: The author held no relevant positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.