DOW JONES NEWSWIRES
Morgan Stanley (MS) plans a $2.2 billion stock offering, a deal
that is expected to include China Investment Corp. and Mitsubishi
UFJ Financial Group Inc. (8306.TO), as it prepares to repay
taxpayer money it received under the government's Troubled Asset
Relief Program.
The financial services giant, which last month sold $8 billion
in stock and debt, said it expects to repay the $10 billion
obtained from the government rescue program by the end of the
month. It had also been instructed in May to raise $1.8 billion as
the result of government stress tests.
Morgan Stanley shares fell 4.9% premarket to $28.43. The
company's market value as of Monday was about $32 billion, meaning
the planned sale would dilute current holders by nearly 7%. Up to
5% more than the planned $2.2 billion in stock could be sold if
there is sufficient investor demand, less than the typical 15%
overallotment.
The latest stock sale comes hours after JPMorgan Chase & Co.
(JPM) and American Express Co. (AXP) announced unexpected plans to
sell shares. Monday the government said large banks must first
prove they can raise money from private investors before exiting
the federal bailout program.
The new rules - laid out by the Federal Reserve, and affecting
the 19 largest bank-holding companies - appear to be more stringent
than what has been required of smaller banks.
Morgan Stanley has recorded two consecutive quarterly losses. It
completed a joint venture deal on Monday with Citigroup Inc. (C)
that gives it control of Smith Barney to help provide a more-stable
earnings stream.
Morgan Stanley has been raising capital through a number of
avenues, including selling its remaining stake in indexing and
analytics business MSCI Inc. (MXB).
-By Tess Stynes, Dow Jones Newswires; 201-938-2473;
tess.stynes@dowjones.com