Vulture Financing Alert: Countrywide pays BofA 7.25% until they can pay no more. Then Bof A gets to help wind-up and dissolve Countrywide

Pretty nifty move by BofA, taking over a cash-desperate CFC for $2 Billion with zero risk if they hedged. They're probably betting that once Countrywide's assets are sold off, or this competitor goes away, they'll do OK. Or if they were even smarter, they bought a ton of CFC put options yesterday at the open. Yes, I'm short CFC.

From MarketTicker:

Under the terms of the Convertible Preferred Securities, set forth on the Certificate of Designations of 7.25% Series B Non-Voting Convertible Preferred Stock of Countrywide Financial Corporation (the “Certificate of Designations”), holders are entitled to cash dividends, payable quarterly, at the rate per annum of7.25% of the Liquidation Preference per share of $100,000.

The initial amount of dividends payable on each share of the preferred stock outstanding for each full dividend period will be $1,812.50. Dividends are cumulative and if dividends are not paid for six quarters, holders of the preferred stock are entitled to designate two directors to the Company’s Board of Directors until dividends have been paid for two consecutive quarters.

With respect to dividends and distributions upon the liquidation, winding-up or dissolution of the Company, the Convertible Preferred Securities rank in priority senior to the Company’s common stock and to each other class of capital stock or series of preferred stock (where the terms of the stock do not expressly provide that it ranks senior to or on parity with the preferred stock) and on parity with any additional Convertible Preferred Securities and any other class of capital stock or series of preferred stock.

Convertible Preferred Securities each have a Conversion Price of $18.00, which may be adjusted upon the occurrence of certain events."