Companies:Bank of america corporation NEW YORK (AP) -- Bank of America Corp. said Tuesday it priced common shares being exchanged for depository shares of preferred stock at an average price of $12.7048 per share.
Related Quotes Symbol Price Change BAC 11.94 0.00
{"s" : "bac","k" : "c10,l10,p20,t10","o" : "","j" : ""} Charlotte, N.C.-based Bank of America is in the process of exchanging outstanding depository shares of preferred stock for up to 200 million common shares. The exchange offer expires at 12 a.m. EDT on Wednesday.
The debt conversion is part of the bank's broader plan to strengthen its capital base after the government said last month it needed an extra $33.9 billion cash cushion. Bank of America was one of 19 banks the government put through "stress tests" to determine if they needed additional capital to offset any additional losses amid a worsening economy.
Since the government released the results of those stress tests, Bank of America has raised essentially all of the capital it needs to meet the government requirement through common stock sales, debt conversions and the sale of certain investments and assets.
By increasing the number of outstanding common shares, Bank of America effectively creates a broader capital base to absorb any potential losses. It also reduces interest or dividend payments that must be made on the depository shares.
Bank of America has been one of the hardest hit banks by the credit crisis and ongoing recession. The bank has received $45 billion in government loans since last fall to help it amid mounting loan and investment losses.
Nearly all banks have faced rising loan losses as more customers fall behind on payments. Investment losses have also piled up at some banks as the value of bonds and other debt have declined.
Shares of Bank of America rose 18 cents to $12.12 in premarket trading.
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