Bank of America raises $19 billion through equity sale
04 Dec 2009
Following its announcement that it would repay $45 billion Troubled Asset Relief Program (TARP) funds, Bank of America plasnsraised $19.5 billion through a new share issue to retire the bailout debt, (See: Bank of America to retire $45 billion bailout debt in days)
Bank of America Corp sold more than $19 billion of equity yesterday amid strong investor interest as it steps up its efforts to shed government regulatory curbs that have dogged its CEO search.
The money raised would help toward servicing the $45 billion bailout debt the bank took on at the peak of the financial crisis at a time when it struggled with the burden of heavy writedowns from its acquisitions of mortgage lender Countrywide and investment bank Merrill Lynch.
The bank had earlier planned to sell securities next Monday, but advanced the sale due to demand. Reuters reports citing a pricing document sent to investors which it obtained that the size of the deal expanded to $19.29 billion of common equivalent securities from the originally planned $18.8 billion.
The securities sold at $15 each, about 5 per cent lower than the mark at which Bank of America shares closed on Thursday. The securities will convert to common stock on approval by investors of an increase in authorised Bank of America shares.
The offering is the largest in a year in which at least 100 US banks sold stock to strengthen their capital as they bore losses on mortages, credit card debt and business loans.
