One of the would-be good guys on Wall Street has now taken a hit to his reputation and maybe dropped the last bomb that could sink the Street. Merrill Lynch CEO John Thain was initially greeted as a savior. He was supposed to have all the tools and magic (and maybe even some snake oil) to save the world’s largest brokerage firm.
The job is on-going but going to be more difficult in spite of or because of news released last night: Merrill Lynch will attempt to raise $8.5 billion in new capital.
In order to pull this off the company went back to Temasek (Singapore), which will buy $3.4 billion of the new offering, expected to be as much as 200 million common share. Management is going to purchase 750,000 shares, too (I feel better already). Moreover, the company also sold mortgage backed assets with a notional value of $30.6 billion for $6.7 billion and will finance 75% of the purchase (Heck, I should have picked up some of that paper).
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