Company News: Fannie Mae selling stock, cutting dividends
Mortgage finance giant Fannie Mae on Tuesday announced it was cutting its dividend 30 percent and selling $7 billion in special stock to raise additional capital.
The government-sponsored company said it was slicing its dividend to 35 cents a share, starting in the first quarter of next year, and issuing $7 billion in preferred stock this month to cushion against losses in lower-quality mortgages.
Fannie Mae, which finances or guarantees one of every five home loans in the United States, last month reported a third-quarter loss of $1.4 billion, while forecasting housing market woes through next year because of mounting home loan delinquencies.
The stock sale “will provide the company with additional capital to conservatively manage increased risk in the housing and credit markets, help meet its mission of providing affordability, liquidity and stability, and free up capital to pursue emerging growth opportunities,” Fannie Mae said in a statement.
The action follows similar moves recently by Freddie Mac, its smaller government-sponsored rival in the $11 trillion home-mortgage market, which posted a $2 billion loss in the third quarter.
The company said Tuesday it expects the continuing turmoil in the housing and credit markets and anticipated further declines in home prices to “negatively affect” its financial condition and results next year.
Fannie Mae shares, already down $1.07 or nearly 3 percent Tuesday, fell another 81 cents to $34.37 in extended trading after the company’s announcement.
Dow Chemical Co. announced Tuesday it is cutting 1,000 jobs, or about 2.3 percent of its work force, as part of a plan to rid itself of underperforming businesses and boost its global efficiency.
The Midland, Mich.-based company, one of the nation’s biggest chemical makers, said it will exit the automotive sealers business within the next nine to 18 months in North America, Asia and Latin America. It will look at options in its European operations.
Other cutbacks include idling a styrene plant in Camacari, Brazil, on Jan. 1 and closing a cellulose manufacturing facility in Aratu, Brazil, in the first quarter of next year.
Wholly owned subsidiary Union Carbide Corp. will shut down its polypropylene facility in St. Charles Parish, La., before the end of the year, and the company will significantly reduce research and development and other functions at a facility in South Charleston, W.Va.
Dow expects the cuts will result in a charge of $500 million to $600 million for write-downs and severance packages in the fourth quarter of 2007.