Industry News

BofA injects $2 billion into Countrywide

Deal gives bank option to buy stock at bargain price

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Countrywide Financial Corp., which last week said it had drawn down an $11.5 billion line of credit with 40 of the world's largest banks, announced Wednesday that it had obtained an additional $2 billion capital infusion from Bank of America -- but it came at a price. In return for its investment, Bank of America was granted a nonvoting convertible preferred security yielding 7.25 percent annually, which it can convert into common stock in the company at $18 per share. Countrywide's stock, which has traded at $15 to $45 in the past year, closed at $21.82 Wednesday before the announcement of Bank of America's investment was released. Countrywide stock surged 10 percent Tuesday after a Wall Street Journal story discussed the possibility that Berkshire Hathaway Inc. would seek to acquire the Calabasas, Calif.-based lender. Bank of America has also been mentioned as a potential Countrywide suitor, and the lender's stock was up 20 percent in after-hours trading Wednesday. Countr...