Tuesday, December 25, 2007

Not Quite A Fire Sale

$6.2 billion between the two of 'em. AP (12.25.07):
"Merrill Lynch became the latest Wall Street bank to grab a financial lifeline from a foreign government, agreeing on Monday to sell $5 billion of new stock to an investor from Singapore and a smaller stake to a domestic firm, as the fallout from the mortgage mess continues to spread.

The move comes as analysts predict that Merrill, the nation's largest brokerage, will write down its mortgage investments by an additional $8 billion or more in the fourth quarter."

Merrill sells stake to Singapore / Temasek Holdings snaps up $5 billion in new stock

A discount? You don't say. "To raise $5 billion, Merrill Lynch will sell new stock to Temasek at a discount to the recent market price. It will sell an additional $1.2 billion of discounted shares to Davis Selected Advisers, a big money management firm based in Tucson."

Ain't over yet, either. "Merrill may have to strengthen its cajpital position further given the likelihood of widening losses on its mortgage investments. 'If, after fourth-quarter earnings, we find that we need to enhance it further, we will,' said a person close to the situation." So they're enhancing their capital position as opposed to staving off insolvency. Tell that to your bank next time your running out of cash and see what happens.

And a damned fine discount it was. "Merrill fell 2.9 percent to $53.90 at 1 p.m. in New York Stock Exchange trading, after the firm said Temasek will pay $48 a share, almost 14 percent less than the Dec. 21 closing price."

And that's not all. Bloomberg (12.24.07):

"Merrill also agreed earlier today to sell its commercial finance business to General Electric Co.'s finance arm for an undisclosed price to free up $1.3 billion of capital."

Merrill Lynch to Get $6.2 Billion From Temasek, Davis

Nope. No fire sales here. Move along, please.



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