CHARLOTTE, N.C. — Bank of America plans to raise $6 billion by selling preferred shares.
The offering will be split between preferred shares and convertible preferred shares, the nation’s second-largest bank said Wednesday. Proceeds will be used for general corporate purposes, BofA said a day after it announced that fourth-quarter earnings dropped 95 percent after $5.28 billion of mortgage-related write-downs and higher provisions for future loan losses.
Chief executive Kenneth Lewis said he wants to rebuild the bank’s Tier 1 capital ratio, which measures its ability to cover losses, to 8 percent of assets. The ratio was 6.87 percent as of Dec. 31, compared with 8.64 percent at the end of 2006.
The convertibles may pay a dividend of 7.25 percent to 7.75 percent and carry a conversion premium of 20 percent to 25 percent, according to a person familiar with the offering who declined to be identified because terms aren’t set. The sale of the convertibles, which aren’t callable for five years, may take place as soon as today.
