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Reply #5: Merrill to sell $8.5 bln stock after big write-down [View All]

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ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-29-08 05:53 AM
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5.  Merrill to sell $8.5 bln stock after big write-down
NEW YORK (Reuters) - Merrill Lynch & Co (MER.N) said on Monday it will take a $5.7 billion third-quarter write-down as it unloads huge amounts of risky debt, and will raise $8.5 billion by selling new stock.

The Wall Street investment bank and brokerage announced its plans less than two weeks after posting a $4.9 billion second- quarter loss, hit by $9 billion of write-downs in that period.

In a sign of how toxic Merrill's debt holdings have become, it has agreed to sell $30.6 billion of collateralized debt obligations (CDOs), a kind of repackaged debt, to an affiliate of private equity fund Lone Star Funds, for just $6.7 billion, or about 22 cents on the dollar.

The fire sale nature of that deal will add to concerns that the global credit crisis, which has already led to more than $400 billion of write-downs and losses at major banks, still has a long way to run.

.....

The company has lost $19.2 billion in the past year and suffered more than $40 billion of write-downs from subprime mortgages and other risky debt. Its shares sank 11.6 percent in New York Stock Exchange trading ahead of the announcement and are now less than a third of their value a year ago.

http://news.yahoo.com/s/nm/20080729/bs_nm/merrilllynch_writedowns_dc
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