Blackrock to oversee Bear takeover
BlackRock will manage and liquidate Bear's assets to repay the loans, interest, and management expenses of the company.
The Federal Reserve Bank of New York has hired BlackRock Inc. to oversee and sell $30 billion of The Bear Stearns Cos. Inc’s assets as part of an effort to hasten JPMorgan Chase & Co.’s purchase of the beleaguered financial services company.
BlackRock will be responsible for managing and liquidating Bear’s assets to repay the loans, interest, and management expenses of the company.
Under the terms of the deal, the Fed will loan $29 billion, and JPMorgan will loan $1 billion, to a new company based in Delaware.
The new company will then send $30 billion to JPMorgan in exchange for some Bear Stearns assets valued at that amount, as of March 14.
JPMorgan will be first to absorb any losses on the assets of up to $1 billion, if there are any, according to the Federal Reserve.
It also disclosed that the loan will run for 10 years and carry the 2.5% interest rate charged to commercial banks at the discount window.
Coinciding with JPMorgan’s March 16 announcement that it would purchase Bear Stearns for $2 per share, the Federal Reserve said it would provide financing to JPMorgan for $30 billion of Bear Stearns “less liquid” assets, (InvestmentNews, March 17) .
On Monday, JPMorgan increased its offer five-fold to $10 per share, in an effort to calm angry shareholders (InvestmentNews, March 24).
Learn more about reprints and licensing for this article.
