Bank of America to issue new preferreds in exchange for Merrill Lynch preferreds

By Angela McDaniels

Tacoma, Wash., Oct. 2 - Merrill Lynch & Co., Inc.'s non-convertible preferred stock will be exchanged for preferreds issued by Bank of America Corp. following the upcoming merger of the companies, according to an S-4 registration statement filed by Bank of America with the Securities and Exchange Commission on Wednesday.

Merrill Lynch has eight series of non-convertible preferreds, including its floating-rate preferreds, series 1, series 2, series 4 and series 5; 6.375% preferreds, series 3; 6.7% perpetual preferreds, series 6; 6.25% perpetual preferreds, series 7; and 8.625% preferreds, series 8.

The terms of the Bank of America preferreds will be substantially identical to the terms of the Merrill Lynch preferreds, except for the additional voting rights.

Holders of Bank of America preferreds will be entitled to vote on all matters submitted to a vote of Bank of America stockholders. Holders of Bank of America series 1, series 2, series 3, series 4, series 5 and series 8 preferreds will get 150 votes per preferred, and holders of series 6 and series 7 preferreds will get five votes per preferred.

Merrill Lynch's 9% non-voting mandatory convertible non-cumulative preferreds, series 2 and series 3, will remain outstanding after the merger and will be convertible into shares of Bank of America common stock based on the exchange ratio of 0.8595.

The merger was announced on Sept. 15 and is expected to close in the first quarter of 2009. Merrill Lynch stockholders will receive 0.8595 of a share of Bank of America common stock for each Merrill Lynch share.

At the special meeting being held to vote on the merger, holders of Merrill Lynch preferreds are not entitled to vote.

Bank of America is a financial holding company based in Charlotte, N.C., and Merrill Lynch is an investment bank based in New York.

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