Merrill Lynch exchanges 97% of 2032 LYONs, gets puts of 88% of 2031 LYONs

New York, Dec. 10 - Merrill Lynch & Co. Inc. said holders tendered $2.232 billion principal amount at maturity or 97% of its Liquid Yield Option Notes due 2032 in its exchange offer for the securities and put back $2.875 billion principal amount at maturity or 88% of its LYONs due 2031 under the additional put.

The exchange leaves $67.892 billion principal amount at maturity of the old LYONs due 2032 outstanding and the put leaves $391 million of the LYONs due 2031 outstanding.

Merrill Lynch said on Nov. 9 it had begun an exchange offer for its LYONs due 2032 and said it has added an additional put to its LYONs due 2031.

In the exchange for the 2032 LYONs, Merrill is offering new securities that are convertible into cash and stock instead of stock only and which have changes to other terms.

Specifically, the changes are:

* On conversion of the new LYONs, Merrill will pay the principal amount in cash and the remainder in cash, stock or a combination. The old LYONs were payable in stock;

* The 5.5% limit on the yield is pushed back to March 13, 2008 on the new LYONs compared to March 13, 2007 on the old securities;

* The call protection is extended to March 13, 2008 from March 13, 2007;

* Additional put dates have been added on March 13, 2006 and March 13, 2008;

* Contingent interest payments - if any - will begin on June 1, 2008 instead of June 1, 2007;

* Contingent interest will be 0.88% of the principal amount instead of a variable rate based on the stock dividend;

* Dividend protection will apply to dividends over $0.16 per share per quarter instead of only for extraordinary cash dividends.

Merrill noted that on Nov. 1 it amended the existing LYONs so that payment of a put is in cash only rather than in cash, stock or a combination at Merrill's option.

The exchange expired at 5 p.m. ET on Dec. 9.

The New York financial services company also said that it is adding an extra put on its 2031 LYONs of Dec. 10, 2004 at $554.40 in cash.

The information agent for the exchange is Global Bondholder Services Corp. (banks and brokers call 212 430-3774; others call 866 470-3800). The financial adviser is Merrill Lynch, Pierce, Fenner & Smith Inc. (888 654-8637 or 212 449-4914).

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