Fresh off a massive loss, Merrill Lynch announced it will write down another of $5.7 billion for the third quarter. Most of that stems from a move to finally get rid of its portfolio of super senior mortgage-backed CDOs, which were once valued at $30.6 billion, the New York Times reports. Merrill Lynch sold them for $6.7 billion to an affiliate of Lone Star Funds. That's 22 cents on the dollar. Ouch. In addition, Merrill plans to raise $8.5 billion in capital from common shareholders, $3.4 billion of which will come from Singapore's Temasek Holdings, already Merrill's largest shareholder. The Times figures the new shares, plus a conversion of preferred securities, will dilute the value of common stock by about 40 percent. This is good news in a sense that the CDOs had long been an albatross. But the capital raise was somewhat surprising in that most people were expecting a deal of some sort involving its 49 percent stake in BlackRock. Current shareholders have every right to be angry.    

For more:
- here's the Times article

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