Freddie Cuts Dividend, Offers Preferred Stock

Freddie Mac will sell $6 billion in noncumulative, perpetual preferred stock and cut its dividend by 50% as part of a plan to meet capital requirements imposed by the Office of Federal Housing Enterprise Oversight.Freddie had hinted at the moves in releasing its third-quarter financial results, which included higher-than-expected credit provisions. The loss put Freddie Mac perilously close to falling short of OFHEO's 30% surplus capital requirement. Freddie Mac chairman and chief executive Richard Syron said issuing preferred stock and cutting the fourth-quarter dividend to $0.25 per share "will help us meet the 30% surplus and address regulatory concerns and GAAP accounting requirements, provide sufficient capital to continue fulfilling our important housing mission through the current market environment, and better position us to effectively manage the company going forward." The preferred stock is being offered through a syndicate of dealers headed by Lehman Brothers and Goldman Sachs. The government-sponsored enterprise can be found online at http://www.freddiemac.com.