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B of A Taps Shareholders in Effort to Raise Capital : New Stock Offering Could Bring In $110 Million; Japanese Expected to OK Purchase of Bank's Notes

July 09, 1987|VICTOR F. ZONANA | Times Staff Writer

SAN FRANCISCO — BankAmerica said Wednesday that it has added its own shareholders to the list of investors from whom it is seeking help in replenishing the company's loss-depleted capital accounts.

The troubled parent of Bank of America said it sent its shareholders a prospectus this week offering them a total of 10 million shares of BankAmerica common stock at a 5% discount.

Based on Wednesday's closing price of $11.625 a share, the plan would raise more than $110 million in new capital for the problem-plagued bank holding company.

Meanwhile, a group of Japanese bankers met Wednesday in Tokyo amid reports that they were concerned that their own capital ratios might be undermined if they agreed to BankAmerica's request that they buy $250 million of its capital notes.

The Dow Jones News Service reported that, despite the concerns about their capital ratios, the Japanese would likely go along with the proposal, in part to defuse current tensions with the United States over Toshiba Corp.'s sale of militarily sensitive equipment to the Soviet Union.

BankAmerica is seeking still another $100 million in financing through the sale of preferred stock to Japanese securities firms and insurance companies.

A BankAmerica spokesman here declined to comment on the reports from Japan.

BankAmerica is struggling to rebuild its equity capital in the wake of a combined net loss of $855 million during 1985 and 1986, and the announcement last month that it will post a net loss of another $1 billion for this year's second quarter.

The second-quarter loss resulted from the bank's reluctant decision to go along with an industry trend and set aside $1.1 billion for expected future losses on loans to troubled Third World borrowers. The second-quarter loss is expected to slash BankAmerica's book value to $15.50 a share.

BankAmerica's common stock trades well below its book value so, even before the 5% discount, the plan to sell 10 million shares of new common stock will dilute the value of the 155.2 million shares of BankAmerica common currently outstanding.

Under the new plan, holders of BankAmerica common and preferred shares will have the right to invest between $100 and $10,000 a month in the common stock, paying 95% of the stock's market value.

In addition, holders will be able to reinvest any cash dividends in B of A common, also paying 95% of the market value. (B of A suspended its cash dividend on common stock last year but continues to pay dividends on the preferred.)

The new plan, which replaces BankAmerica's old dividend reinvestment plan, is in keeping with arguments made by BankAmerica Chairman A. W. Clausen in spurning a $21-a-share takeover offer earlier this year by First Interstate Bancorp of Los Angeles.

At the time, Clausen argued that B of A's long-suffering shareholders--not those of First Interstate--should receive the benefit from BankAmerica's eventual turnaround.

Now those shareholders, many of whom are sitting with huge paper losses, have the chance to buy more stock at a price that presumably is close to the bottom in the hopes that the long-promised turnaround will eventually materialize.

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