Bank of America Corporation announced today that it reached a USD 5 billion deal with Warren Buffet's Berkshire Hathaway, which agreed to buy shares in BoFA. "Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it," said Berkshire Hathaway Chairman and Chief Executive Officer Warren Buffett.

Bank of America has recently announced it would cut 10,000 jobs in a cost cutting move, of which 3,500 jobs in the current quarter.

The deal includes two stages. Firstly, the 50,000 Cumulative Perpetual Preferred Stock with a liquidation value of USD 100,000 per share will be sold to Berkshire Hathaway, Inc. in a private offering, according to Bank of America. The preferred stock has a dividend of 6 percent per annum, payable in equal quarterly installments, and is redeemable by the company at any time at a 5 percent premium.

Berkshire Hathaway will also receive warrants to purchase 700,000,000 shares of Bank of America common stock at an exercise price of USD 7.14 per share, during the 10-year period following the closing date of the transaction. The aggregate purchase price to be received by Bank of America for the preferred stock and warrants is USD 5 billion in cash.

"We are building the best franchise in financial services and we have laid out a clear plan to deliver long-term shareholder value," said Bank of America Chief Executive Officer Brian Moynihan. "I remain confident that we have the capital and liquidity we need to run our business. At the same time, I also recognize that a large investment by Warren Buffett is a strong endorsement in our vision and our strategy."

The full official announcement from Bank of America here.

editor@romania-insider.com

(photo source: Fortune Most Powerful Women event)