Merrill Lynch Launches Auction Of Seized Bear Stearns Fund Assets

Discussion in 'Wall St. News' started by S2007S, Jun 21, 2007.

  1. S2007S


    Merrill Lynch Launches Auction Of Seized Bear Stearns Fund Assets, Sources Say [MER]

    6/20/2007 7:52:37 PM Merrill Lynch & Co. (MER) on Wednesday launched an auction of assets from two troubled hedge funds controlled by Bear Stearns Cos. Inc. (BSC), sources said.

    Not every security was sold, but Merrill Lynch is believed to have sold enough to cover its exposure to the funds. About $850 million of securities were put up for sale, and a series of derivative positions will be put up for sale on Thursday.

    Bear Stearns had hoped its rivals who invested in the funds, including JPMorgan Chase & Co., Deutsche Bank, and dozens of other creditors, would allow it to put together a rescue plan.

    So far, only JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) have agreed to unwind positions without selling the assets on the open market, sources said.

    Merrill Lynch shares closed Wednesday's regular trading session at $87.68, down $2.36 or 2.62% but gained 2 cents in after hours trading. Bear Stearns shares closed the regular trading session at $143.20, down $3.59 or 2.45% but gained $1.66 or 1.16% in after hours trading. JPMorgan shares closed the regular trading session at $49.46, down $1.39 or 2.73% but gained 22 cents in after hours trading.
  2. S2007S


    NEW YORK, June 20 (Reuters) - Bank of America Corp. (BAC.N: Quote, Profile , Research) has unwound its positions with two hedge funds managed by Bear Stearns Cos., (BSC.N: Quote, Profile , Research), a source close to the matter said.

    Unwinding its positions will allow Bank of America to close out its exposure to the hedge funds without selling the funds' assets on the open market.

    Goldman Sachs Group Inc. (GS.N: Quote, Profile , Research) and JPMorgan Chase & Co. (JPM.N: Quote, Profile , Research) entered similar agreements with the funds.

    Bank of America declined to comment. Bear Stearns was not immediately available for comment.
  3. S2007S


    Barclays Bank has about $300 million of the riskiest assets within two troubled hedge funds at Bear Stearns that have other banks either freezing assets in the funds or unwinding their positions in order to cut potential losses, CNBC's Charlie Gasparino reported.

    Citing traders close to the situation, Gasparino described the Barclays
    Barclays PLC (BCS)
    58.72 -0.79 -1.33%
    Quote | Chart | News | Profile | Add to Watchlist
    [BCS 58.72 -0.79 (-1.33%) ] assets as "radioactive stuff" that would be "next to impossible to auction."

    Barclays had no comment when reached by Gasparino.

    On Wednesday, Merrill Lynch
    Merrill Lynch & Co Inc (MER)
    87.68 -2.36 -2.62%
    Quote | Chart | News | Profile | Add to Watchlist
    [MER 87.68 -2.36 (-2.62%) ] finished auctioning off most of the $800 million in assets it had in the Bear Stearns
    Bear Stearns Co Inc (BSC)
    143.2 -3.59 -2.45%
    Quote | Chart | News | Profile | Add to Watchlist
    [BSC 143.2 -3.59 (-2.45%) ] funds, which controlled more than $20 billion in a combination of investor and lender money, and had invested heavily in various securities backed by subprime loans.

    "If Barclays Bank does hold this stuff that it can't sell, Barclay's will take one of the biggest hits on its balance sheet when all gets said and done," Gasparino said.

    The auction, which began after 4 pm New York time, was described during the day as going "OK," Gasparino reported.

    Meanwhile, JPMorgan Chase
    JPMorgan Chase & Co (JPM)
    49.46 -1.39 -2.73%
    Quote | Chart | News | Profile | Add to Watchlist
    [JPM 49.46 -1.39 (-2.73%) ] reached an agreement with Bear Stearns to unwind its position with the funds rather than seize its assets and sell them, as Merrill did, Gasparino has learned.

    Gasparino said a big question is whether other firms will follow Merrill's example and sell off the assets or just unwind them the way JPMorgan Chase did.

    Other key lenders include Goldman Sachs Group
    Goldman Sachs Group Inc (GS)
    225.89 -3.58 -1.56%
    Quote | Chart | News | Profile | Add to Watchlist
    [GS 225.89 -3.58 (-1.56%) ] and Bank of America
    Bank of America Corp (BAC)
    49.98 -0.57 -1.13%
    Quote | Chart | News | Profile | Add to Watchlist
    [BAC 49.98 -0.57 (-1.13%) ].

    The Bear Stearns hedge funds, which got hit by double-digit losses in April based on subprime mortgage market bets, have some $9 billion in loans.

    Investors have been closely watching to see whether problems in these two funds could spread to others and cause big losses at major banks.