Under the proposed new terms being discussed on Sunday, Mitsubishi would still buy roughly 21 percent of Morgan Stanley, these people said. But all of the investment would be through preferred shares, with a 10 percent annual dividend. Many of those shares would be convertible into common stock, but the Japanese bank was trying to set a conversion price far lower than originally proposed.
Mitsubishi and Morgan Stanley Renegotiating [NYT]
Posted by guest , Oct 12, 2008 7:05PM
last!
Posted by guest , Oct 12, 2008 7:09PM
too long; didn't read.
Posted by beentheredonethat , Oct 12, 2008 7:12PM
Mitsubishi will get its price reset. MS can't afford a breakdown in negotiations. All the Japanese have to do is wait then out until the early morning, and will be forced to capitulate to whatever is on the table then. If it's not enough to suit them,, they will then call Paulson. NO ONE has an ounce of loeverage over Mitsubishi in these negotiations. Paulson will tell MS to take whatever they can get, shut the fuck up, and call him back on his private line.
Posted by guest , Oct 12, 2008 7:15PM
reuters reporting
"MUFG to buy $9 billion Morgan Stanley convertible preferred shares that will convert in $20-$25 range; Treasury not investing alongside MUFG: source"
Posted by beentheredonethat , Oct 12, 2008 7:17PM
@4
Not a chance in the 20-25 range. Why would they even be negotiating? 25 was the original pricew (near enough) and if Mitsubishi is willing to do a deal at 20, MS would say yes faster than lickety-split. The price will be nearer to half that range.
Posted by guest , Oct 12, 2008 7:19PM
Because it's all preferred now instead of common stock
Posted by guest , Oct 12, 2008 7:20PM
Not much value to Mitsubishi if this is the MAC clause - again these things are alwasy construed heavily against the buyer if there are no specifics in the MAC clause.
Also, MS could claim at this point that Mitsubishi re-negotitaion was the cause of of adverse change.
I don;t pretend to know what will happen. I can say that Mitsubishi must be negotiating with an understanding that there could be tens of billions of downside if they don't go through with the deal.
In these situations, the deal virtually always gets done with some face-saving tidbits thrown in at the last minute. It's a nuclear winter situation where both sides have too much to lose.
Posted by guest , Oct 12, 2008 7:24PM
Fuck those people here that said this was a done deal and the fed had approved and it was just a five day waiting period. Myself and several others called it that with the stock dropping and without a firm resoundingly confident press release from Mitsu that MS was in trouble and nothing was certain about the level of injection MS would get - an this is proof fucking positive! MS has a proverbial gun to it's head and machete to it's nuts - Mexican standoff. MS NEEDS THE CASH LIKE A THAI HOOKER AND WILL TAKE WJAT IT GETS OR GO THE FULD ROUTE.
- The Great Santini
Posted by guest , Oct 12, 2008 7:25PM
If you're going to do business in/with Asian markets just remember, negotiating begins when the contract has been signed. This is especially true if you're negotiating from a position of weakness.
SPODE
Posted by guest , Oct 12, 2008 7:25PM
They will all be swallowed up by mono-corporatism anyway. Democracy means dealing with congress and dissent - the kinds of things that make an "empire" lethargic and ineffective. http://tinyurl.com/4ofhre
Posted by beentheredonethat , Oct 12, 2008 7:26PM
@7
That is a parrot from the NY Times reporter who doesn't know shit. This is way above his paygrade, he's probably less than 30 years old, and has a journalism degree. And writing for the NY Times, he's gay, ADD, visually impaired, lives UWS, goes to temple twice a year.
Posted by beentheredonethat , Oct 12, 2008 7:30PM
@ 8&9
Absolutely correct. Even with the large macro hedge funds, when you havve an agreement, and then bonus time comes, you end up negotiating what you believed to be agreed upon 12 months ago.....Way of the world now......There are a 1000 outs in anyone of these types of agreements, and if you can't find a good one, you go judge shopping. Especially elected ones.
Posted by guest , Oct 12, 2008 7:34PM
Anyone who thought this deal was done has clearly never done business in Asia, especially with the Japanese.
The Japanese have big leverage here. Sure, it might not be "legal" for them to walk from the deal, but MS would implode immediately if they did, so someone else would get to buy the lawsuit.
And 20-25 dollar range on the conversion is a big hit. It used to be $31. This condemns MS stock to trash value, as if there was any doubt about that.
Posted by guest , Oct 12, 2008 7:35PM
@8 - Your BS proves nothing. They will likely still inject the same amount of capital for around 21% of the firm, but with prefs and at a lower convert price. Those terms are still much better than the ones suggested by people like you, or better yet, by the people who said that Mitsubitshi would pull out for sure. Mitsu is fairly pregnant at this point, if it pulled out, then the panic that would trigger could easily mean a much bigger loss to them and everyone else.
Posted by guest , Oct 12, 2008 7:36PM
Yeah the difference in convert prices is a huge cut of anywhere from 20-30%
Posted by beentheredonethat , Oct 12, 2008 7:42PM
Just so everyone is aware, the G-7 has publicly stated MS will not go the way of LEH, so there is a floor here. Where? Not sure, but $2 is a reasonable bet considering how much has been flowing out of the firm.
Posted by guest , Oct 12, 2008 9:00PM
@14, nope, if they invest in preferred they will own a far greater % of the firm's equity value, if we assume that the pref will trade around par. and if the conversion price is around the current level, on conversion they would own like 50% of the common.
Posted by guest , Oct 12, 2008 9:19PM
i'm sitting here cupping my own farts .. Anyone else enjoy doing this?
Posted by guest , Oct 12, 2008 10:15PM
This is Peal Harbor II.
Posted by guest , Oct 12, 2008 10:26PM
This is Pearl Harbor II, too.
Posted by guest , Oct 12, 2008 10:32PM
Contracts are simply the first stage of negotiation. Counter-suits and settlement offers are part of the negotiation. Grow up.