Thursday, August 25, 2011

Comparing Warren Buffet's Rescue Deals (BAC; GS; GE)

From Deal Journal:
Terms of Warren Buffett’s Rescue Deals
Warren Buffett’s rode to Bank of America’s rescue this morning, by investing $5 billion in the battered banking giant. Buffett is known for carefully choosing to make investments in companies under siege, and he charges dearly for his seal of approval.

The blueprint for the Bank of America deal was deals Buffett struck during the financial crisis. Here is a look at the terms of his crisis investments in three key companies:

Bank of America, 2011
$5 billion
preferred stock plus 6% annual dividend
warrants to buy 700 million shares at $7.14 a share (in the money as of today)

General Electric, Oct. 2008
$3 bilion
preferred stock plus a 10% annual dividend
warrants to buy 134.8 million GE share at a price of $22.25 (out of the money)
Redeemed at at cost of $3.3 billion....MORE