Merrill Scores Big Investment

Merrill Lynch (MER Quote - Cramer on MER - Stock Picks) is looking to overseas investors to help the securities firm stabilize its operations, saying Tuesday that it will sell $6.6 billion of preferred stock, mostly to buyers from abroad.

In a press release, Merrill said it will issue mandatory convertible preferred shares in private placements, primarily to the Korean Investment Corporation, the Kuwait Investment Authority and Mizuho Corporate Bank.

TPG-Axon Capital, the New Jersey Division of Investment, the Olayan Group and T. Rowe Price, on behalf of various clients, are also purchasing some of the Merrill preferred.

Merrill said all of the investors will be passive and won't have any rights of control or role in the governance of the firm. Shares of Merrill were losing 1.9% to $54.90 in premarket trading.

"I am very pleased with today's announcement," said John Thain, the former head of the New York Stock Exchange, who became CEO at Merrill late last year after writedowns led to Stanley O'Neal's departure. "One of my main priorities over the last several weeks has been to ensure Merrill Lynch's balance sheet is strong, and these transactions make certain that Merrill Lynch is well-capitalized."

Thain also said in a prepared statement that the benefits of Merrill's collaboration "with these high quality, long-term investors are significant. Through their global reach and diverse client relationships, we are looking forward to more strategic opportunities around the world."

Merrill will post its fourth-quarter and full-year results on Thursday.