Warren Buffett Bailout of the Day: GE
GE announced that it has reached agreement to sell $3 billion of perpetual preferred stock in a private offering to Berkshire Hathaway, Inc. The perpetual preferred stock has a dividend of 10% and is callable after three years at a 10% premium. In conjunction with this offering, Berkshire Hathaway will also receive warrants to purchase $3 billion of common stock with a strike price of $22.25 per share, which is exercisable at any time for a five-year term.
GE also announced plans to offer at least $12 billion of common stock to the public.
October 2nd, 2008 at 12:31 am
After netting out the value of the warrants, the interest rate paid by GE was 13-14%, versus 17% for GS.
October 2nd, 2008 at 4:48 am
13% for a Triple A, that shows how off base money market rates are due to Fed manipulation.