Bank of America Has Raised $26 Billion - Bank of America said Wednesday that it has raised about $26 billion of the roughly $34 billion in new capital that the government said it needed to raise after recently finished stress tests. In addition to a previously announced $13.5 billion common stock sale, and about $7.3 billion raised from the sale of China Construction Bank shares, the company said Wednesday it has also added $5.9 billion to its capital via a preferred stock conversion. It said it has entered into agreements with certain holders of (non-government) perpetual preferred shares to exchange their holdings of about $5.9 billion of preferred stock into roughly 436 million common shares. Bank of America reiterated that it might also sell assets like First Republic Bank and Columbia Management Group to raise more capital.
Discount Retailer Dollar Tree Profits Jump - Dollar Tree said Wednesday that its first-quarter profit increased 39% as stores open at least a year posted a 9.2% increase in sales. Dollar Tree said it earned $60.4 million, or 66 cents a share, compared with a profit of $43.6 million, or 48 cents a share, in the first quarter of 2008. Net sales rose to $1.20 billion from $1.05 billion. On average, analysts polled by Thomson Reuters were expecting a profit of 60 cents a share on sales of $1.19 billion. In the second quarter, Dollar Tree expects to earn 47 cents to 51 cents a share on revenue in the range of $1.17 billion to $1.20 billion, as same-store sales grow by a "low-to mid-single digit" percentage.
GM - Bondholder Offer Rejected, Bankruptcy Likely - With the overwhelming rejection of the proposed equity for debt swap for current GM bondholders, the company looked to be heading towards bankruptcy. Even with a late concession by the United Auto Workers (UAW) union that it would take a 20% stake in GM (down from the original plan of 39%), the deal seems done. The new concession by the UAW would have essentially freed 19% of the equity stake to be put towards current bondholders - bringing their stake to 29%. Since the deal did not go through, the equity freed by the UAW deal now apparently will go to the U.S. which may have to commit billions more for GM's restructuring in court.
As it stands now, the government's ownership could go as high as 69% from what was originally 50%. The Canadian government also could get equity for up to $8 billion in aid for the automaker.
Over 90% of Economists See US Recession Ending in 2009 - According to a report from the Associated press, more the 90% of leading forecasters in a survey by the National Association for Business Economics say the recession will end in 2009. It is generally in line with the outlook from Federal Reserve Chairman Ben Bernanke and his colleagues. According to the AP, about 74% of the forecasters expect the recession to end in the third quarter, 19% predict the turning point will come in the final three months of this year, and the remaining 7% believe the recession will end in the first quarter of 2010.
"While the overall tone remains soft, there are emerging signs that the economy is stabilizing," said NABE president Chris Varvares, head of Macroeconomic Advisers. "The economic recovery is likely to be considerably more moderate than those typically experienced following steep declines."