• 25 Aug 2011 at 9:17 AM

Warren Buffett Puts His Guarantee On Bank Of America’s Box

By

Yesterday morning, as Bank of America continued “reaping the benefits of what Countrywide hath sowed,” Jim Cramer proposed an idea: get a billionaire to vouch for you. Just as Warren Buffett investing in Goldman Sachs had been a signal that everything was cool with the Masters of the Universe and Prince Alwaleed and his horses’ unflagging love ‘o Citi have at times kept the bank afloat, BofA, Cramer proposed, should get someone to send a message that all is good in the hood. JC suggested Carlos Slim was the guy to take one for the team, while we liked the idea of, among others, Bruce Wayne, Lynn Tilton or Warren Buffett, who enjoys spreading the love. Apparently WB is our man.

Bank of America Corporation announced today that it reached an agreement to sell 50,000 shares of Cumulative Perpetual Preferred Stock with a liquidation value of $100,000 per share to Berkshire Hathaway, Inc. in a private offering. The preferred stock has a dividend of 6 percent per annum, payable in equal quarterly installments, and is redeemable by the company at any time at a 5 percent premium.

In conjunction with this agreement, Berkshire Hathaway will also receive warrants to purchase 700,000,000 shares of Bank of America common stock at an exercise price of $7.142857 per share. The warrants may be exercised in whole or in part at any time, and from time to time, during the 10-year period following the closing date of the transaction. The aggregate purchase price to be received by Bank of America for the preferred stock and warrants is $5 billion in cash.

“We are building the best franchise in financial services and we have laid out a clear plan to deliver long-term shareholder value,” said Bank of America Chief Executive Officer Brian Moynihan. “I remain confident that we have the capital and liquidity we need to run our business. At the same time, I also recognize that a large investment by Warren Buffett is a strong endorsement in our vision and our strategy.”

“Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it,” said Berkshire Hathaway Chairman and Chief Executive Officer Warren Buffett. “I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. Bank of America is focused on their customers and on serving them well. That’s what customers want, and that’s the company’s strategy.”

[BusinessWire/MarketWatch]

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Comments (73)

Older Comments
  1. 1
    Posted by Guest | August 25, 2011 at 9:36 AM

    D@mn! Now here I thought Billionaire Ken Griffin was clearing out some desk space today to buy BAC. Uncle Warren, you beat him to the punch!

  2. 2
    Posted by Guest | August 25, 2011 at 9:38 AM

    So Henry wasn't so wrong. It's not like Buffett was buying shares in the open market. Looks like he's injecting capital to me.

  3. 3
    Posted by Anal_ist | August 25, 2011 at 9:39 AM

    He already has almost a 20% return on his loan just from the warrants.

    "Damn it feels good to be a gangsta…"

  4. 4
    Posted by guest | August 25, 2011 at 9:44 AM

    Normally, I would chose lights off, but with that inviting pose, defintely lights on!

  5. 5
    Posted by VonSloneker | August 25, 2011 at 9:44 AM

    You hear that sound? It is the sound of the zerohedge/business insider readership opening their windows to jump

  6. 6
    Posted by Lenny Dykstra | August 25, 2011 at 9:45 AM

    My check didn't clear??

  7. 7
    Posted by #1BessFan | August 25, 2011 at 9:48 AM

    Bess rang up Uncle Warren and suggested the deal.

  8. 8
    Posted by Long_John_Son | August 25, 2011 at 9:50 AM

    I told you that Jim Cramer was the new Oracle!

    - UBS Analyst

  9. 9
    Posted by UBS Senior Analyst | August 25, 2011 at 9:51 AM

    Why would he pay $100,000 per share! BAC is only trading at a little over $8.

    Its a good thing I pulled my money out of his fund and invested in J. Paulson!

  10. 10
    Posted by Cut Me | August 25, 2011 at 9:51 AM

    Rang up, or rolled over and climbed over Becky Quick?

  11. 11
    Posted by PBate | August 25, 2011 at 9:52 AM

    I prefer the JPM murder and execution

  12. 12
    Posted by B2b MD | August 25, 2011 at 9:52 AM

    Somewhere in South Florida Bruce Berkowitz is sticking pins in his Warren Buffet doll.

  13. 13
    Posted by agreatdaytothink | August 25, 2011 at 9:55 AM

    Those warrants are now worth > $1B based on current BAC price.

    I guess what they say is true. The first $65B really is the hardest.

  14. 14
    Posted by inlovewithpmco | August 25, 2011 at 9:56 AM

    PMCO did he cut you out of the deal?

  15. 15
    Posted by Dr_Rosenrose | August 25, 2011 at 9:58 AM

    Can someone please explain whether or not warrants are dilutive, and if they are, how this isn't a capital raise?

  16. 16
    Posted by daytime | August 25, 2011 at 9:58 AM

    best headline ever

  17. 17
    Posted by Guest | August 25, 2011 at 9:59 AM

    I just crystallized a 17% loss on my BAC investment. Damn it feels good to be a gangsta..

  18. 18
    Posted by Guest | August 25, 2011 at 10:00 AM

    out of the deal beacuse her avatar has herpes.

  19. 19
    Posted by Covey 01 | August 25, 2011 at 10:01 AM

    What ever you may say about Warren, he does put his money where his mouth is. He is certainly a better
    alternative to some of the idiots in Washington (or elsewhere).

  20. 20
    Posted by juniormistmaker | August 25, 2011 at 10:01 AM

    I'd be willing to pay more taxes too if people literally handed me money all of the time.

  21. 21
    Posted by Alt_EST | August 25, 2011 at 10:02 AM

    Bank of America: Warren Buffet's 'Rebound Bank.'

  22. 22
    Posted by Guest | August 25, 2011 at 10:03 AM

    My money is on the orange guy. I think he will take the old man down, just like he did with the Robot and Ole Kenny boy.

  23. 23
    Posted by EIA Shale Gas Quant | August 25, 2011 at 10:04 AM

    The BAC talk was all BS. BAC failing? Capital troubles? All of it was crazy. It was crazy to think that BAC would go away! It would be as crazy as…..say….ok, an American collegiate golf team posing nude for a team picture! Oh sure like that would ever happen. I just have to laugh at that crazy idea! I'll put it to you this way: The day a n American collegiate college team poses nude for a team picture is the day I start believing BAC is in trouble! Because It.Will. Never. Happen.!!
    'Nuff said? OK.

  24. 24
    Posted by Guest | August 25, 2011 at 10:04 AM

    Did he put his Goldman warrants up as margin?

  25. 25
    Posted by steel reserve 40oz | August 25, 2011 at 10:09 AM

    he's just unlocking value from his brand-equity. don't hate…

  26. 26
    Posted by inlovewithpmco | August 25, 2011 at 10:09 AM

    check yourself when referring to pmco

  27. 27
    Posted by The Observer | August 25, 2011 at 10:09 AM

    Only when it comes to the private sector

  28. 28
    Posted by guest | August 25, 2011 at 10:11 AM

    First ken lewis bails out my 2008 guarantee, now uncle warren gonna bail out the 2011 tranche, a great day to be an american capitalist!

    -T Montag

  29. 29
    Posted by Alpha_Bets | August 25, 2011 at 10:13 AM

    The numbers in this deal simply do not add up! According to the Law of One Price, what we've got here is an "arbitrage opportunity."

    -UBS Arithmetic Quant

  30. 30
    Posted by VonSloneker | August 25, 2011 at 10:14 AM

    What's 7% of your company as a kicker between friends?

  31. 31
    Posted by Dick_Bove | August 25, 2011 at 10:15 AM

    My nipples are hard right now.

    -Dick Bove

  32. 32
    Posted by Dick Fuld | August 25, 2011 at 10:24 AM

    How Dare He!

  33. 33
    Posted by Guest | August 25, 2011 at 10:30 AM

    You're still gonna call me right?

    - GS

  34. 34
    Posted by Texashedge | August 25, 2011 at 10:35 AM

    The strike price was going to be $7.142858, but WB–ballbuster that he is–held out for $7.142857. That's how he makes the big bucks.

  35. 35
    Posted by minus 1 | August 25, 2011 at 10:38 AM

    he looks like he's in a sauna. That's right, WB takes a steam in a full suit, how he keeps his shapely figure throughout earnings season

  36. 36
    Posted by Gues | August 25, 2011 at 10:40 AM

    Warren loves putting his eggs in one basket

    - Becky

  37. 37
    Posted by Guest | August 25, 2011 at 10:40 AM

    so are MCC's – The GUNS are out

  38. 38
    Posted by Dick Fuld | August 25, 2011 at 10:41 AM

    Just sleeping around with everyone aren't you…whore, I never wanted you anyway

  39. 39
    Posted by 3rd String | August 25, 2011 at 10:43 AM

    I would totally clog his waste pipe with my manhood.

    -Tim Tebow

  40. 40
    Posted by DingALing | August 25, 2011 at 10:46 AM

    By the time this transaction is complete, WB will be holding both ankles.

  41. 41
    Posted by T Callahan | August 25, 2011 at 10:48 AM

    You know Warren, you can get a good look at a T-bone steak by putting your head up a bull's ass…

  42. 42
    Posted by can't_focus | August 25, 2011 at 10:52 AM

    indeed, distracted in NY

  43. 43
    Posted by US Geologic Survey | August 25, 2011 at 10:57 AM

    Better change your opinion then….
    http://blogs.golf.com/presstent/2011/08/truth-rum…

  44. 44
    Posted by Le Donald | August 25, 2011 at 11:00 AM

    Hey! I'm a big wheeler dealer too!

  45. 45
    Posted by Soloman Brothers | August 25, 2011 at 11:01 AM

    Buffett always helps out!

  46. 46
    Posted by Covey 01 | August 25, 2011 at 11:14 AM

    If Warren is tapping from time to time, them let him spread his pollen!

  47. 47
    Posted by FKApmco | August 25, 2011 at 11:22 AM

    I can neither confirm nor deny.

  48. 48
    Posted by Lazy Fare | August 25, 2011 at 11:52 AM

    Making a billion before lunch just by putting your stamp on a piece of shit is the NKI…

  49. 49
    Posted by Gues | August 25, 2011 at 11:57 AM

    If Warren does put his money where his mouth Becky's Quick gynecologist must be one busy motherfucker

  50. 50
    Posted by Cut Me | August 25, 2011 at 11:58 AM

    Herpes or being cut out?

  51. 51
    Posted by Cut Me | August 25, 2011 at 11:59 AM

    Warren, no need to call a doctor. Your viagra has been wearing off since it started.

  52. 52
    Posted by Lazy Fare | August 25, 2011 at 12:00 PM

    Making a retarded post so you can respond to yourself and tell yourself how much of an idiot you are is the NKI…

  53. 53
    Posted by Charlotte's Future | August 25, 2011 at 12:03 PM

    Thanks WB.

  54. 54
    Posted by Dr. Feel Good | August 25, 2011 at 12:11 PM

    Hello Mr. Blodget.

  55. 55
    Posted by FKApmco | August 25, 2011 at 12:18 PM

    +10

  56. 56
    Posted by Ba3 | August 25, 2011 at 12:31 PM

    Short the bitch!

  57. 57
    Posted by Alan Lowe | August 25, 2011 at 12:35 PM

    reminds me of the time i had some dirty box

  58. 58
    Posted by P the cable guy | August 25, 2011 at 12:50 PM

    Screw you man!

  59. 59
    Posted by P the cable guy | August 25, 2011 at 12:58 PM

    You short you get killed, keep it moving folks nothing to see hear.

  60. 60
    Posted by Guest | August 25, 2011 at 3:09 PM

    Bunkers have windows?

  61. 61
    Posted by AlphaGekko | August 25, 2011 at 3:21 PM

    With all that easy money he is getting from BAC, he can go out and buy Becky Quick something nice.

  62. 62
    Posted by George Zimmer | August 25, 2011 at 3:30 PM

    Shit, he beat me to it.

  63. 63
    Posted by VonSloneker | August 25, 2011 at 3:45 PM

    Too soon? You're right…I'll table it until next week

  64. 64
    Posted by Take That! | August 25, 2011 at 4:48 PM

    Well, I note that your mouth is rounded as well.

  65. 65
    Posted by +1 | August 25, 2011 at 4:49 PM

    a day late and a dollar short

  66. 66
    Posted by DeLoss Donmatter | August 25, 2011 at 4:49 PM

    Thank you, Dean of Bethany College!

  67. 67
    Posted by Lazy's Shrink | August 25, 2011 at 5:06 PM

    Lazy…you sound like my mother only not as erotic

  68. 68
    Posted by Gaspo | August 25, 2011 at 8:00 PM

    I didn't read the article closely but I saw the names Warren Buffett, Lynn Tilton and Jim Cramer. Did they have a threesome? Did Cramer do Warren?

  69. 69
    Posted by Brian Moynihan | August 27, 2011 at 12:34 AM

    Yeah this deal has worked out well so far… Can't wait for my net worth to reach a million dollars again!

  70. 70
    Posted by Pat Bateman | August 27, 2011 at 12:38 AM

    Excuse me, I've had enough of the impersonations… I'm in Murders and Executions if you're concerned with that…. But, do you know where I work? Well… I work on Wall Street…

  71. 71
    Posted by G SCOPELABS | September 27, 2011 at 3:02 PM

    here Long_John_Son is my PROOF that Cramer is an ORacle! http://www.youtube.com/watch?v=vlyemagCQ8Y

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