BofA and Buffett amend deal

|About: Bank of America Corporation (BAC)|By:, SA News Editor

Under the new terms - which require shareholder approval - Bank of America (BAC) is prohibited from redeeming the $2.9B in preferred stock issued to Berkshire (BRK.A, BRK.B) for five years and the stock will continue to pay a 6% dividend. The dividends, however, will no longer be cumulative, meaning the bank won't be penalized if forced to skip a payment.

In exchange, BofA will be able to count the $2.9B as Tier 1 capital - a good deal for the bank which faces ever-more-stringent capital requirements.

Buffett originally invested $5B in BofA in 2011, acquiring the preferred stock along with warrants struck at $7.14 and expiring in 2021 allowing the purchase of 700M shares - thus far a home run.

Regulatory filing