Hedge fund manager David Tepper wrote to Whirlpool stating that the equity offering undermines shareholder value

Hedge fund Appaloosa Management founder David Tepper wrote to Whirlpool (WHR.US), accusing its board of undermining shareholder value and calling for a complete overhaul of its strategy and leadership.

Tepper expressed shock at the company's equity offering, deeming it a massive and unnecessary dilution of shareholder equity. He stated that the cost of this financing exceeds 10%, far higher than the company's after-tax adjusted debt cost of less than 5% in the public market, even though management had publicly stated a desire to reduce leverage.

Whirlpool announced yesterday an equity offering to raise $455 million and raised $508 million through the issuance of depositary receipts, with the stock price plummeting 14% on Tuesday.

As of the end of last year, Whirlpool was the eighth largest holding in Appaloosa Management's portfolio, valued at $282 million