Merrill to Sell $8.5 Billion of Stock, Unload CDOs

[Joanne98]

Source: Bloomberg

July 29 (Bloomberg) -- Merrill Lynch & Co., the third- biggest U.S. securities firm, will sell $8.5 billion of stock and liquidate $30.6 billion of bonds at a fifth of their face value to shore up credit ratings imperiled by mortgage losses.

Temasek Holdings Pte., the Singapore-owned fund that became Merrill's biggest investor by acquiring shares in December, will buy $3.4 billion of the new stock, Merrill said yesterday in a statement. The New York-based company is paying Temasek $2.5 billion to offset losses on its earlier investment. Merrill will also book $5.7 billion of writedowns in the third quarter.

Almost $19 billion of net losses in the past year forced Chief Executive Officer John Thain to backtrack from assurances that the firm had enough capital to weather the credit crisis. Since taking the post in December, Thain has raised $30 billion in an effort to keep pace with mounting charges on mortgage bonds amassed by his predecessor, Stan O'Neal. Standard & Poor's cut the firm's debt rating last month and signaled that more downgrades were possible.

``It does mark an attempt at curing the problem but at a tremendous cost to existing shareholders,'' said Charles Peabody, an analyst at Portales Partners LLC in New York who recommends selling Merrill shares. ``How can you be pleased by that? It's a necessity.''



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aoNJEp7BHg14&refer=home

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Your love is like baaaaad medicine!

[Joanne98]

1. Here's a link to the MER message board.

They're freaking out all ready. lol

http://messages.finance.yahoo.com/mb/MER

[Pale Blue Dot]

2. I'm kind of freaking out about it too.

I'm an economic pessimist, and even I am shocked at how fast the financial system is unraveling. From what I've been reading, this move has done 2 very important things:

1. Eroded the trust investors had in the veracity of financial firms' books and statements;

2. Devalued similar "assets" at other firms.

More and more it seems like the average investor is "getting it"; they can see where this is heading. It's frustrating to see the MSM still hanging on to fantasy for dear life.

[Frisbee]

3. We're gonna need another FDR to fix this mess...

I've got my fingers crosses the Barack Obama may be that person.

[Pale Blue Dot]

4. I'm afraid it's not that simple.

FDR didn't inherit a government that was trillions of dollars in debt, so he could spend his way out of the crisis. Obama doesn't have that luxury.

[Frisbee]

6. I'm not saying that it will be easy...

But someone is going to have to make some hard and unpopular decisions to get us out of this mess. Even if Obama is the man for the job, it is going to take more than 2 presidential terms under the best of circumstances.

[xchrom]

5. recommend

one has to wonder -- is another gov bailout of one of these giants far behind?

corporations working the ever renewing gold mine called taxes.

[NBachers]

7. But . . . But . . . a bailout would be Socialism!

Sputter sputter ghak outraged indignity

[Skink]

8. Warp speed Mr. Sulu.