by Calculated Risk on 10/12/2008 05:44:00 PM

Andrew Sorkin reports in the NY Times: Mitsubishi and Morgan Stanley Renegotiating

Under the proposed new terms being discussed on Sunday, Mitsubishi would still buy roughly 21 percent of Morgan Stanley ... But all of the investment would be through preferred shares, with a 10 percent annual dividend. Many of those shares would be convertible into common stock, but the Japanese bank was trying to set a conversion price far lower than originally proposed.

Treasury, however, is not planning to have the United States government take a direct stake in Morgan Stanley ... Mitsubishi and the Japanese government have sought assurances from the Treasury Department that if the United States were to decide to inject money into Morgan Stanley at a later time ... that such a move would not wipe out preferred shareholders.

Sorkin writes that an announcement is expected before the market opens on Monday.

Note: The final details of the UK bank recapitalization plan is expected at 7 AM London time.