Now we know why the stock didn't bounce!
Merrill is raising $8.5 billion, and Temasek holdings, who did the first raise at $48 gets shares at the lower price with a $2.5 billion dividend payout, to forget about the reset provision in their original capital raise.
The super senior CDO's, Merrill sold at 22 cents on the dollar, to Lone Star funds, financing 75% of the purchase price. At the price it dumped them, it looks like Merrill Lynch underestimated the cost of the "kitchen sink" by $4.4 billion from 30 days ago!
Merrill Lynch also cut deals with the monolines, and satisfied their lawsuit with XL and SCA.
So Merrill has now lost money on home mortgages, home equity lines, and now they've lost $4.4 billion on the kitchen sink!
Thank goodness it wasn't gold plated!
But this should make Meredith Whitney happy. On the last conference call, she asked Merrill Lynch why they just don't find a bid, sell things and start over.
Today Merrill did.