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Fri, Aug 24, 2007 - Page 10 News List

Bank of America invests in Countrywide Financial

AP , LOS ANGELES

Countrywide Financial Corp said on Wednesday that Bank of America Corp had made an investment of US$2 billion in the company, a deal that comes as the US' largest mortgage lender tries to weather a credit crunch that has rocked Wall Street and the mortgage industry.

The transaction was completed and funded on Wednesday, Countrywide said.

"Bank of America, with US$1.5 trillion in assets, has the largest retail banking franchise in the US and is one of the most respected companies in the world," Angelo Mozilo, Countrywide's chairman and chief executive said.

"Bank of America's investment in Countrywide represents a vote of confidence and strengthens our balance sheet, enabling us to position Countrywide for future growth and success," Mozilo said.

Under the terms of the deal, Bank of America acquired US$2 billion in the form of nonvoting, convertible preferred stock yielding 7.25 percent annually, Countrywide said.

The shares can be converted into common shares of Countrywide at US$18 per share, with certain restrictions, Countrywide said.

Countrywide shares jumped jumped more than 20 percent to US$26.25 in after-hours trading. Before Countrywide's announcement, the shares had closed the regular session up US$0.03 at US$21.82.

Kenneth Lewis, Bank of America's chairman and CEO, said in the statement that turmoil in the stock market has led some to underestimate the value in Countrywide's operations and assets.

"This investment reflects our confidence in their business and recognizes the importance of the company in providing home financing across the country," Lewis said.

Countrywide said on Thursday last week it had borrowed US$11.5 billion from several dozen banks so it could keep making home loans.

Shares of Bank of America, which rose US$0.35 in regular trading on Wednesday to US$51.65, gained another 1.8 percent to US$52.60 in after-hours trading.

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