In mid-January 2008, Merrill Lynch announced a $ 6.6 billion mandatory convertible preferred stock, issue, most of which was placed privately with the Kuwait Investment Authority (KIA), Korea Investment Corporation (KIC), and Mizuho Corporate Bank. The case is among the sub-prime mortgage crisis, which has raged in banks and depleted its capital. It focuses on the decision to give John Thain capital and put it in sovereign wealth funds (SWFs) in an attempt to stabilize the company and put it on a path to growth and profitability again. The case describes the various types and origins of SWFs, their orientation, and their latest intensive investment activity in the global financial services sector. The case also discusses the transparency of SWFs and their role in the global financial system, the liquidity provision of long-term players. Finally, the solution of Merrill Lynch to issue a specific financial instrument to replenish its capital (mandatory convertible-preferred) and its conditions are analyzed. "Hide
by Giorgos Allayannis, Rachel Loeffler Source: Darden School of Business 9 pages. Publication Date: October 15, 2008. Prod. #: UV1059-PDF-ENG
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