Merrill readies another huge write-down

The Investment bank will record yet another huge write-down as it sells off most of its troubled asset-backed securities.

Investment bank Merrill Lynch & Co. announced late Monday that it will record yet another huge write-down as it sells off most of its troubled asset-backed securities and terminates hedging positions linked to bond insurers in an effort to shed its riskiest businesses, according to Crain’s New York Business.

With the sales, Merrill Lynch expects to record $5.7 billion pre-tax writedowns in the third quarter.

The Manhattan-based firm also said it plans to raise $8.5 billion by selling shares in a public offering. Temasek Holdings, Singapore’s sovereign wealth fund, has agreed to purchase $3.4 billion of Merrill’s common stock as part of that exercise.

The after-hours news followed a particularly brutal day for Merrill Lynch. Its shares lost 11.6% of their value to close the day at $24.33.

Earlier this month, Merrill Lynch reported a $4.7 billion second-quarter net loss, the firm’s fourth consecutive quarter in the red. It suffered more than $9.4 billion of write-downs in the quarter, bringing the amount of write-downs it has taken since the markets seized up last summer to about $40 billion.

The Associated Press contributed to this article.