Merrill Lynch gets $6.6 billion infusion

The firm received the sum from selling preferred shares to a group of global investors.

In the wake of a subprime meltdown that resulted in $8.4 billion of writedowns for Merrill Lynch & Co., the firm has received $6.6 billion from selling preferred shares to a group of global investors.
The buyers include the Kuwait Investment Authority, Japan’s Mizuho Financial Group Inc., the Korea Investment Corp. and clients of U.S. money managers TPG-Axon Capital and T. Rowe Price Associates Inc., Merrill Lynch officials said.
Merrill, which suffered its biggest loss in its 93-year history during the 2007 third quarter, also agreed to sell a $6.2 billion stake to Singapore’s Temasek Holdings and Davis Selected Advisors LP in late December https://www.investmentnews.com/apps/pbcs.dll/article?AID=/20071226/REG/769379536/1094/INDaily03&ht= (Investment News, Dec. 26).
In the latest sale, Merrill will pay a 9% annual dividend until they automatically convert into shares in two years, nine months’ time.
The group will also get more shares if Merrill’s stock price drops below $52.40.
“One of my main priorities over the last several weeks has been to ensure Merrill Lynch’s balance sheet is strong, and these transactions make certain that Merrill Lynch is well capitalized,” said John Thain, CEO of the New York City-based advisory firm.