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WASHINGTON : Troubled mortgage finance giant Freddie Mac announced plans Friday to raise 5.5 billion dollars through a new share offering as it registered with stock market regulators.
Freddie Mac, which along with rival Fannie Mae have been roiled by concerns about solvency in the face of a housing market meltdown, informed its regulator, the Office of Federal Housing Enterprise Oversight, the share offering "will include both common and preferred securities," according to a statement.
"The timing, amount and mix of securities to be offered will depend on a variety of factors, including prevailing market conditions, and is subject to approval by Freddie Mac's board of directors."
The company added that preliminary indications for the second quarter, "while reflecting the challenges that face the industry, will leave the company expecting to be capitalized at a level greater than the 20 percent mandatory target surplus established by OFHEO."
Freddie, which like Fannie is federally chartered but shareholder owned, also announced that it has become a registrant with the Securities and Exchange Commission under the Securities Exchange Act of 1934.
"Becoming an SEC registrant marks an important milestone for the company and demonstrates our commitment to enhanced transparency and financial reporting," said Freddie Mac chairman and chief executive Richard Syron.
"It demonstrates the continued progress we've made to strengthen Freddie Mac's foundation and ensure that we can continue to serve our vital housing mission. It is important to note that this registration statement does not relate to an offering of securities."
"With this accomplishment, we conclude what was a difficult chapter in Freddie Mac's history and join the ranks of other large, public financial institutions as an SEC registrant," said Buddy Piszel, executive vice president and chief financial officer.
With shares of Fannie and Freddie pummelled in recent weeks by solvency worries, the Federal Reserve opened up its lending facility and the US Treasury proposed a plan to allow more credit and government equity, subject to congressional approval.
- AFP /ls
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