CALABASAS, Calif., Aug. 22 /PRNewswire/ -- Countrywide Financial Corporation (NYSE: CFC), a diversified financial services provider and the leading mortgage lender and servicer in the U.S. announced today that it has received a $2 billion strategic equity investment from Bank of America (NYSE: BAC). The transaction was completed and funded today.
"Bank of America, with $1.5 trillion in assets, has the largest retail banking franchise in the U.S. and is one of the most respected companies in the world," said Angelo R. Mozilo, chairman and chief executive officer of Countrywide. "Bank of America's investment in Countrywide represents a vote of confidence and strengthens our balance sheet, enabling us to position Countrywide for future growth and success," added Mr. Mozilo. "This transaction benefits all of Countrywide's constituents, including investors, shareholders, mortgage customers, deposit holders, business partners and employees," concluded Mr. Mozilo.
"We believe that in the current turmoil the stock market has been underestimating the value in Countrywide's operations and assets," said Kenneth D. Lewis, Bank of America chairman and chief executive officer. "This investment reflects our confidence in their business and recognizes the importance of the company in providing home financing across the country. We hope this investment will be a step toward a return to a more normal liquidity in the mortgage markets. Countrywide has a strong mortgage origination business and it services the mortgages of one in seven American households."
Bank of America has invested $2 billion in the form of a non-voting convertible preferred security yielding 7.25 percent annually. The security can be converted into common stock at $18 per share, with resulting shares subject to restrictions on trading for 18 months after conversion.
The agreement between the parties is subject to customary standstill restrictions prohibiting the acquisition of beneficial ownership of additional voting securities of Countrywide.
Goldman Sachs & Co. acted as financial advisor to Countrywide and Wachtell, Lipton, Rosen & Katz served as legal advisor. Bank of America Securities acted as financial advisor to Bank of America, and Cleary, Gottlieb, Stern & Hamilton served as legal advisors.
SOURCE: Countrywide Financial Press Release
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