Despite its plans to sell 25% more shares of BlackRock Inc. than it intended, Bank of America Corp. remains, at this point, short of the amount of capital it is supposed to have raised by a yearend deadline.
Late Monday, a giant secondary offering of BlackRock shares by Bank of America and PNC Financial Services Group Inc. was priced at $163 a share.
That price was a 3.6% discount to Monday's closing price and 5.8% lower than the price at which the shares had traded before last week's sale announcement.
Though Bank of America now plans to sell 10 million more shares than had been originally expected, including 2.45 million directly to an unnamed institutional investor, the benefit to its equity could be smaller than thought.
This could mean the money-center banking company remains short of the $1.1 billion in further equity it is supposed to have raised by Dec. 31 as a condition for repaying the $45 billion it received from the government under the Troubled Asset Relief Program.
Spokesman Jerry Dubrowski reiterated Tuesday that the company remains "actively pursuing noncore asset sales." The sale of the BlackRock stake is "one part of a broader strategy" to raise equity, he said.
"We continue to pursue several potential asset sales that may reduce the remaining amount of capital required, and we are working hard to complete these sales by yearend," Dubrowski said in an e-mailed statement.
If Bank of America exercises in the next 30 days its entire overallotment, and completes the sale to the institutional investor, it will have sold 51.2 million shares of BlackRock.
It had originally planned to sell 40.8 million.
After the offering, if the overallotment is used, Bank of America would hold a 7.1% stake in BlackRock's capital stock, down from 33.9%, according to a BlackRock filing.
The total value of the portion of the stake to be sold, at the offering price, would be $8.35 billion.
But the cost of the offering, which determines the amount of equity capital raised in the sale was expected by analysts to be nearly $157 per share.
That cost would greatly reduce the pretax gain the banking company could realize from the sale.
With a pretax profit on the sale of roughly $6 a share, Bank of America would add about $307 million to its equity capital before taxes.
Analysts had been forecasting that the offering, after taxes, might bring in $300 million to $600 million in equity.
The Charlotte banking company disclosed Friday that, of the $3 billion it was supposed to raise in equity when it paid off the Tarp funding in December 2009, it had raised $1.9 billion.
Its filing warned that, if it did not raise the additional $1.1 billion, of which the BlackRock stake would be a part, it could have to pay some employee bonuses in stock instead of cash.
The company has said its bonus planning is not complete.
Before the BlackRock deal, the company said it had sold assets yielding about $10 billion in gross proceeds, adding $1.9 billion to its capital holdings.