WARREN BUFFETT SAVES BANK OF AMERICA

For his $5 billion, Buffett is also getting the right to buy a staggering 700 million Bank of America common shares at $7.14 a share–options that are already in the money. This represents 7% dilution to Bank of America’s common stockholders.

In other words, Buffett is getting a preferred security paying 6% a year that is protected from dilution from future capital raises AND an option to buy 7% of the company–all for $5 billion. That’s expensive money. But given that Bank of America waited too long to raise capital, it’s also clearly the best deal they could get.

http://www.businessinsider.com/warren-buffett-saves-bank-of-america-2011-8

Best Regards,

FINANCIAL WARRIOR

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