(Agencies)
Updated: 2007-12-25 17:02

Chicago - Merrill Lynch announced on its website Friday that it has enhanced its capital position by reaching agreements to raise up to US$6.2 billion of newly issued common stock in a private placement with Temasek Holdings and Davis Selected Advisors.

Merrill Lynch expects these transactions to close by mid-January 2008. One of the biggest investment banks on Wall Street, the company has been trying to raise capital to help bail it out of huge losses related to the subprime mortgage crisis.

Merrill has already taken US$7.9 billion of write-downs from bad bets on risky mortgage-backed securities. According to the agreements, Temasek Holdings will invest US$4.4 billion in Merrill Lynch common stock and has the option to purchase an additional US$600 million of Merrill Lynch common stock by March 28, 2008.

Its ownership position will at all times represent less than 10 percent of Merrill Lynch's outstanding common stock.

Davis Selected Advisors, an independent investment advisor founded in 1969 and currently managing equity assets of more than US$100 billion through a number of funds, will be making a long-term investment of US$1.2 billion in common equity.

Both Temasek Holdings and Davis Selected Advisors will be passive investors and will not have any rights of control and have no role in the governance of Merrill Lynch.