Stearns, creditors may save hedge fund
NEW YORK --Bear Stearns Cos., the biggest broker for US hedge funds, has offered to provide $1.5 billion in loans to help rescue a money-losing fund run by its asset management unit, according to a person familiar with the situation.
The plan calls for New York's Bear Stearns to provide the money only if some of the hedge fund's creditors, which include Merrill Lynch & Co. and JPMorgan Chase & Co., inject $500 million of cash into the fund, said the person, who declined to be named because the negotiations aren't public.
Bear Stearns, seeking to stave off liquidation of the fund, made the commitment Monday in a meeting with creditors after losses forced the sale of $4 billion of mortgage bonds last week. Merrill Lynch and JPMorgan had planned to sell another $800 million of bonds of debt obligations owned by the fund this week, the person said. The fund's potential closure sparked concern about wider losses in the market for subprime mortgage bonds and CDOs.
Bear Stearns spokesman Russell Sherman didn't immediately return calls seeking comment. Jessica Oppenheim, a spokeswoman for Merrill Lynch, declined to comment, as did Brian Marchiony, a spokesman for JPMorgan. 