The
Wall Street Journal is reporting that:
Freddie Mac executives are sounding out private equity
firms and other investors about the possibility of buying new common or
preferred shares in the mortgage company. But that effort is running up
against what may be an insurmountable hurdle: Many investors fear any
money they invest now in Freddie or its main rival, Fannie Mae, will be
lost later if the U.S. Treasury bails out the companies through a
purchase of equity in them. Investors believe such a purchase would
likely involve terms that would wipe out the value of previously issued
shares.
McLean,Va.-based Freddie plans to
raise $5.5 billion
or more in capital but faces an uphill battle as the value of the
mortgage-related assets it holds continues to deteriorate, leading many
to expect a government bailout in company's future. While Freddie Mac
notes that--by regulatory standards--it has an ample financial cushion,
the trouble raising funds and a second quarter loss of $821 million or
$1.63 per share on August 6 have battered its shares and left many
potential investors waiting on the sidelines. -
George White
See WSJ story
See story on Freddie Mac's earning on TheDeal.com
