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Temasek raises stake in Merrill
Bill Condie29 Jul 2008
Singapore sovereign wealth fund Temasek is sinking another $900 million (£453 million) into Merrill Lynch as the investment house seeks further capital.
The deal is part of Merrill's latest plan to shore up its finances by selling $8.5 billion of stock and liquidating $30 billion of money-losing assets at a fifth of their original value.
Temasek invested $5 billion in Merrill in December and February at $48 per share, but the stock has fallen by about half since then. The fund will invest $3.4 billion in the Merrill public offering but will be paid $2.5 billion "as an adjustment to the price of Temasek's original investment," a spokeswoman said.
The original deal required Merrill lynch to compensate Temasek should the Us firm subsequently raise new capital at a lower price. in all, Merrill will book a $2.5 billion expense related to the transaction as well as $5.7 billion of additional writedowns.
