The Caisse de dépôt et placement du Québec, OMERS, Manulife, and a company controlled by Hong Kong billionaire Li Ka-shing are buying $1.5 billion worth of CIBC stock by way of a private placement as the bank tries to enhance its capital position.
The purchase price of the shares acquired by the private placement investors is at the discounted price of $65.26. CIBC’s stock closed at $72.07 on Monday.
The bank has also commenced a $1.25 billion bought deal in a public offering of common shares at $67.05 apiece.
CIBC’s president and CEO, Gerry McCaughey, says this action “provides our shareholders with greater certainty that CIBC’s capital levels will remain strong even in the event that additional write-downs related to the U.S. residential real estate market become necessary.”
The bank also announced it would take nearly US$2.5 billion in before-tax write-downs related to its exposure to the subprime mortgage market in the United States.
The news comes just a week after CIBC announced that two of its executives would be leaving and Richard Nesbitt would be joining World Markets. To read TSX CEO Joining CIBC World Markets, click here
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