Goldman Sachs Group (GS) reaches agreement to sell $5 billion of perpetual preferred stock to Berkshire Hathaway (BRKA) in a private offering. Preferred stock has a dividend of 10% and is callable at any time at a 10% premium. Berkshire will also receive warrants to purchase $5 billion of common stock with strike price of $115 per share, exercisable at any time for a 5-year term. GS also says it is selling at least $2.5 billion in common equity in a public offering. Wachovia reiterates outperform.
Citigroup (C) falls 0.84 to 19.15. Bloomberg reports that C is in talks to sell its Primerica unit to J.C. Flowers & Co. and Protective Life (PL), citing people with a knowledge of the talks. According to the report, Flowers may invest in PL, which would then buy Primerica.
American International Group (AIG) signs a definitive agreement with Federal Reserve Bank of New York for 2-year, $85 billion revolving credit facility. Interest will accrue at a rate based on 3-month LIBOR plus 8.50%.
Bank of New York Mellon (BK) says as a result of recent market events, it will provide support to clients invested in money market mutual funds, cash sweep funds, and similar collective funds impacted by the Lehman Brothers bankruptcy filing. Expects to incur after-tax charge of about $425 million in the third quarter, which includes additional costs associated with previously disclosed capital support agreements that were outstanding at the end of the second quarter.
Capital One Financial (COF) affirms previously issued 2008 financial expectations, but notes that if margins remain at or near second quarter levels, COF expects to be toward lower end of its mid-single digit revenue growth projection. Says it expects continuing weakness in U.S. economy. Also expects to build its allowance for loan losses by about $200 million in the third quarter. This would result in allowance for loan losses as of Sept. 30, 2008 that would have capacity to absorb equivalent of about $7.2 billion in managed losses over next 12 months. Proposes public offering of 14 million shares.
Sunpower (SPWR) and other solar stocks are seen higher following U.S. Senate's passage of a bill that would extend $18 billion in tax credits for renewable energy for 8 years.
Medicis Pharmaceutical (MRX) falls 2.16 to 15.76 after the company says its Audit Committee concluded that the company's financial statements for the annual, transition and quarterly periods from 2003 through 2007 and first quarter and second quarter of 2008, will likely need to be restated and should no longer be relied upon as well as Ernst & Young LLP's reports on the financial statements and effectiveness of internal control over financial reporting for the related periods. Suspends previously reported financial guidance for remaining periods of 2008. S&P downgrades to sell from hold.
Energy Conversion Devices (ENER) rise 9.13 to 65.59 after ENER says that its business remains strong, there has been no change to its fundamentals, and the announced changes in customer Solar Integrated Technologies' business do not affect ENER's positive growth outlook. Credit Suisse reiterates outperform.
General Growth Properties (