The Big Dilution Begins: MER raising capital

Remember way back in May when Thain said: "This slowdown “won't impact Merrill so much,”?

It turns out that his fingers were crossed, and there is 25% dilution on the way for current shareholders.

Why would anyone believe that he is done diluting shareholder value, especially when he has just demonstrated that he doesn't have even two months visibility into his financials?

Update: The details are even more sordid that I believed at first glance. They are unloading some of their CDOs, but are financing the deal so that they don't completely come off the books:

Merrill Lynch will provide financing to the purchaser for approximately 75% of the purchase price. The recourse on this loan will be limited to the assets of the purchaser. The purchaser will not own any assets other than those sold pursuant to this transaction.

Financials are going to have an interesting day tomorrow.

Second update: Nice list of Thain quotes:

My favorite: Right now we believe that we are in a very comfortable spot in terms of our capital." (July 17, 2008 -- Thain on a conference call after posting Merrill's second-quarter results)