Morgan Stanley Gets Cash Infusion from Japanese Bank
On Monday Morgan Stanley announced the completion of its deal with Japanese bank Mitsubishi UFJ Financial Group to receive a $9 billion investment. The closing comes a day earlier than expected, and with revised parameters for what Mitsubishi will receive for its investment. The deal, which gives Mitsubishi a 21 percent stake in Morgan Stanley, was revised after Morgan Stanley lost nearly 60 percent of its value last week amid speculation the deal would not close.
Shares of Morgan Stanley moved sharply higher Monday, rising $4.12, or 42.6 percent, to $13.80.
The revised deal is more attractive to Mitsubishi, giving it only preferred stock, instead of a mix of preferred and common stock. That enables Mitsubishi to receive dividends on the entire investment. A portion of the preferred stock is convertible to common stock under the revised deal at a price lower than the initial common stock investment, allowing Mitsubishi to eventually receive more common shares.
As part of the revised deal, Mitsubishi will receive $7.8 billion in convertible preferred stock that carries a 10 percent dividend and is convertible at a price of $25.25 per share. The Japanese bank will also receive $1.2 billion in non-convertible preferred stock, which also carries a 10 percent dividend.
Published on October 13, 2008
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