CHARLOTTE, N.C. (
Bank of America
saw strong demand for its TARP-busting secondary offering late Thursday, selling half a billion dollars more in securities than it originally envisioned at a discount of less than 5% to its common stock.
Shares of the nation's largest bank were holding up well following news overnight of the details of the offering, which is pegged to generate gross proceeds of $19.3 billion through the sale of "common equivalent securities" -- consisting of depositary shares and warrants to purchase common stock -- that priced at the equivalent of $15 per common share.
Bank of America shares finished Thursday at $15.76, up a little more than a dime. Trading in the wake of the company's
of its TARP repayment plans late Wednesday was volatile. Nearly 650 million shares changed hands on Thursday, well beyond the issue's trailing three-month daily average of 185.2 million. The stock rose as high as $16.74 during the session, a gain of 7%, before selling off. Shares were recently quoted at $15.75 in premarket trades, a penny lower.
When Bank of America announced its TARP repayment plan, it said it was targeting a capital raise of $18.8 billion, so the offering exceeded that goal by a fair amount. Next on the agenda will be the actual payback of TARP, which a Bank of America spokesman told
on Thursday could take place in a
. The government will still have some exposure to Bank of America through warrants, but the company doesn't plan to
Of more pressing concern is, of course, the company's
for a replacement for outgoing CEO Ken Lewis. The idea that Chief Risk Officer Greg Curl could serve in the role on an interim basis since Lewis is scheduled to leave on Dec. 31 was floated in press coverage immediately following news of the TARP repayment plan, but there's also the fact that getting out from under government scrutiny is likely to make the job much more attractive to outside candidates to consider.
According to the
Wall Street Journal
, Bank of America is unlikely to hire a new CEO until at least next week with the board -- which has already missed a number of self-imposed deadlines to make its choice -- set to meet on Tuesday in Charlotte, N.C.
article also describes many of the developments leading up to Wednesday's announcement of the TARP repayment plan, saying Lewis initially met with Treasury Secretary Timothy Geithner about the company's desire to repay the funds in early September, and that Bank of America proposed a $10 billion capital raise in October that was shot down as insufficient by regulators. The article also refers to Curl as the "point person" on TARP payback talks that escalated between Bank of America and the government throughout October and November.
Early Friday Standard & Poor's lifted its preferred-stock ratings for Bank of America to 'BB' from 'B' and boosted its equivalent ratings on the bank's subsidiaries to 'BB+' from 'B' in the wake of the capital raise. The agency also affirmed its other ratings on the company, including its 'A/A-1' counterparty credit rating, and said its outlook is stable.
Written by Michael Baron in New York.