Bank Blames SEC ‘Timetable’ for Slowing Plan to Raise $1 Billion Deteriorating Demand for Its Stock Seen as Obstacle for B of A Offering

BankAmerica’s plan to raise up to $1 billion in new capital, already behind schedule because of a longer-than-expected review by the Securities and Exchange Commission, may be further delayed by the deteriorating market for BankAmerica stock, banking industry sources said Thursday.

In late January, when BankAmerica sought SEC approval for the offering, the company said it hoped to win approval and to begin offering some of the securities by the middle of this month.

BankAmerica’s stock has fallen about 20% since the proposed offering of subordinated debt, preferred stock and warrants was unveiled.

The stock’s decline was brought on by First Interstate Bancorp.’s withdrawal of its $21-a-share acquisition offer and, more recently, from investor concerns over Brazil’s decision to suspend interest payments on foreign commercial debt. BankAmerica is owed about $2.7 billion by Brazil.

Analyst Joseph Arsenio of Birr, Wilson & Co. said that under his “worst-case scenario,” BankAmerica could be forced to write off $150 million to $200 million later this year as a result of Brazil’s action.

BankAmerica’s common closed at $11.875 a share on Thursday, off 25 cents, on a trading volume of 443,300 shares.

A BankAmerica spokesman attributed the offering’s delay to “the normal process of getting (the SEC’s) comments and responding to them.”

“It is not our timetable,” he added. “It is the SEC’s.”

The spokesman said it was “unproductive” to speculate on what market conditions may be when the offering is approved. He declined to say what questions have been raised by the SEC, which would say only that it is reviewing BankAmerica’s filing.

“Beyond this,” the BankAmerica spokesman added, “we would only note that all observers seem to believe that, in the case of Brazil, a mutually supported resolution is in the best interests of all involved.”

Analysts said BankAmerica doesn’t need to hold its offering immediately to stage its recovery. “There is not an imminent, pressing need for capital,” said Donald Crowley, a banking analyst with the San Francisco office of Keefe, Bruyette & Woods Inc.

But, he added, “new capital is desirable for the long-term rehabilitation of the company.”

One investment banking source suggested that B of A might bring in Merrill Lynch to help Salomon Bros. underwrite the offering. BankAmerica declined comment.

BankAmerica initially was widely expected to sell $500 million in securities under the so-called “shelf” registration, leaving the rest on the shelf for offering over the next two years.

Observers noted that BankAmerica’s filing for SEC approval had helped to ward off First Interstate’s hostile bid because the offering would have increased First Interstate’s acquisition cost. But analysts said that they doubted that First Interstate would renew its bid because of any delay in the offering brought on by poor market conditions.

“If FIB came back, the stock would go up, and B of A would be able to proceed with its offering,” said Dan Williams, an analyst with Sutro & Co. in San Francisco.

“And if the Brazilian problem is for real, it would really cool First Interstate’s ardor for B of A.”

An FIB spokesman declined comment, saying only that the Los Angeles-based company would continue to monitor developments at BankAmerica “very carefully.”