Will Merrill Sell Me Something?

This is the classic “I’ll pay you to take it” scenario…Thain is a pretty shrewd guy (please note sarcasm. )

So, Merrill Lynch (MER) unloaded $30bn in CDO for 22 cents on the dollar to Lone Star. They required Lone Star to put up 6 cents on the dollar to buy the portfolio and then loaned them the balance. Here is the kicker, as collateral for the loan, Lone Star, the buyer, is using the CDO’s it bought from Merrill.

In short, if Lone Star defaults in the loan, their losses are limited to the initial investment of $1.8 billion and Merrill’s sole recourse is to get’s back the CDO’s they just dumped. Lone Star’s upside is total, meaning they share none of it with Merrill…

From Merrill’s press release:
“Merrill Lynch will provide financing to the purchaser for approximately 75 percent of the purchase price. The recourse on this loan will be limited to the assets of the purchaser. The purchaser will not own any assets other than those sold pursuant to this transaction. The transaction is expected to close within 60 days.”

If Merrill wants to sell anything else, please email me!!!!!!!!!!!….Please?

Disclosure (“none” means no position):None …Thank God

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