Countrywide (CFC) Financial has hired Goldman Sachs and law firm Wachtell Lipton Rosen & Katz to arrange another multi-billion investment in the company, just weeks after Bank of America (BAC) made a $2 billion investment in preferred shares in the mortgage company, according to The New York Post.
The deal could involve several hedge funds and one or more money center banks.
Countrywide’s shares continue to fall. They are now off 52% over the last three months. Alliance Capital Management disclosed that it has sold about 31 million shares of Countrywide in the last month. Barclays Global Investors has also sold nearly 25 million shares.
One by-product of a new round of financing would probably be the departure of CEO Angelo Mozilo. It was on his watch that the company became especially aggressive in offering loans to home buyer who appear to have been bad credit risks. This may have helped CFC earnings for several quarters, but the piper is being paid now. Mr. Mozilo has been a big seller of his own stock.
Douglas A. McIntyre