Saturday, September 27, 2008

The Fed blesses BofA's marriage with Mother Merrill

Anyone see this nugget after the close Friday regarding Merrill Lynch and it's shares of Blackrock?

Item 5. Interest in Securities of the Issuer.
(a) As of September 25, 2008, the Reporting Persons beneficially owned, in the aggregate, 52,396,167 Shares and 12,604,918 shares of Preferred Stock. The beneficially owned Shares represent, in the aggregate, beneficial ownership of approximately 44.7% of the Common Stock outstanding. The Reporting Persons constitute a “group”, within the meaning of Section 13(d)(3) of the Exchange Act. Accordingly, each Reporting Person may be deemed to beneficially own any Shares that may be beneficially owned by each other Reporting Person.

On September 25, 2008, ML&Co, MLGSI and the Issuer entered into a consent and waiver (the “Consent”) with respect to the Amended and Restated Stockholder Agreement (the “Stockholder Agreement”), dated as of July 16, 2008, between ML&Co. and BlackRock. The Consent permits ML&Co. and any of its relevant affiliates to take advantage of the Federal Reserve Bank of New York’s (the “Federal Reserve”) recent expansion of eligible collateral under the Primary Dealer Credit Facility by, among other things, entering into one or more repurchase agreements (each, a “Repurchase Agreement”) with the Federal Reserve for all or a part of the Shares owned by MLGSI. The Consent and the Stockholder Agreement are attached hereto as exhibits 7.04 and 7.05 respectively, and are incorporated in their entirety into this Item 6.

The Consent expires upon, and any Repurchase Agreement will mature according to its terms immediately prior to, the consummation of ML&Co’s proposed merger with Bank of America Corporation. If ML&Co and MLGSI do not meet their obligations under a Repurchase Agreement, neither the Federal Reserve nor any subsequent owner of the Shares will become subject to any of the terms or provisions of the Stockholder Agreement. In that event, ML&Co. will remain bound by all applicable terms of the Stockholder Agreement.

Merrill Lynch, now can take their Blackrock paper to the Fed window (PDCF) the Primary Dealer credit Facility and loan it to the Fed for cash, and hold unto the cash until their merger with Bank of America goes through!

BAC closed at 37.50. (Disregard the scam late print that the specialist got.) The ratio of the merger is .86, meaning Mother Merrill, and 27 and change is now worth $32 of BAC which is heading higher, and now this merger has been officially blessed and kissed by the financial pope/rabbi, Mr. Ben Bernanke.

Blackrock closed at 210, and 52 million shares means that Mother Merrill has gotten a boatload of cash from the Fed. And it's $10 billion dollars.

The same amount Goldman Sachs raised Wednesday by investors and Buffett.

The same amount that JPM raised Friday in a stock offering.

And it will probably be the same amount that Morgan Stanley raises next week!

$10 billion dollars, and you can't short the stocks.

Anyone think this number will go higher Monday? Especially when we get a resolution on the $700 billion bail-out?

If you are long Merrill you are now twice blessed!

And if you are short Morgan Stanley, you had better cover. Come hell or high water, $10 billion is coming their way!

1 comment:

ahmed said...

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