Countrywide Reportedly Looking For Another Cash Bailout

Countrywide Financial Corp. is reportedly negotiating with Goldman Sachs Group Inc. and law firm Wachtell Lipton Rosen & Katz to arrange for another infusion of liquidity along the lines of the $2 billion deal with Bank of America Corp. last month.News of the negotiations was first reported by the New York Post, attributed to unidentified sources familiar with the proceedings, and triggered another day of decline for shares of the company.Falling as much as 5% yesterday, Countrywide stock has lost about 61% of its value in 2007.Last month, Countrywide secured a $2 billion investment from Bank of America in exchange for 111 million common shares of the Calabasas, California-based lender.While Countrywide gained a much needed infusion of cash, the shares yield 7.25% for BoA and can be converted at any time into common stock at a price of $18.If Bank of America was to convert the preferred stock, the deal would translate into a 16% stake in Countrywide.Prior to the cash infusion, Countrywide was forced to tap $11.5 billion of emergency credit lines - one of several developments in the real estate market that prompted the Federal Reserve to cut the discount rate, which is the borrowing cost for banks.Although the nation’s top lender has made a concerted media push insisting that the company is doing well, the efforts have been undercut by recent news of sweeping layoffs.After eliminating 500 employees last month and another 900 last week, Countrywide estimated that an additional 10,000 to 12,000 employees – representing about 20% of their workforce – will be shed over the next three months.The announcement follows the elimination of 500 employees last month and another 900 last week - a stark contrast from last May, when the company said it expected to sweep up about 2,000 sales employees from the ashes of its fallen rivals.Citigroup Inc. and JPMorgan Chase & Co., along with unnamed hedge funds, reportedly have shown interest in making an investment in Countrywide. In response to market speculation about the negotiations, Countrywide issued a statement."Regarding media reports today about Countrywide Financial Corporation, it is the company's policy not to comment on market rumors."Reiterating its earlier statements regarding cash and liquidity needs, the company has already taken decisive steps to address the challenges arising in this environment and thereby enable Countrywide to meet its funding needs and position the company for continued growth and success."Posted on Wednesday, September 12, 2007 by staff