Legg Mason rescues money markets

Legg Mason Inc. will contribute $240 million to bail out three money market funds of one of its subsidiaries hurt by exposure to risky asset-backed securities and weak markets in June. The Baltimore-based money manager's capital support agreements with the Western Asset Management in Pasadena, Calif. will terminate in nine to 12 months. As a result of the bailout, Legg expects to post a charge of $154.5 million, or $1.09 per share, for the quarter ended June 30. The deal will cost Legg Mason $90 million after taxes, or 64 cents per share, at the end of the second quarter. "The support provides the funds with flexibility to work through difficult markets as we seek to reduce the exposure in the funds," Mark R. Fetting, president and chief executive of Legg Mason, said in a statement. "We are confident in the overall soundness of the company's money market funds and remain committed to providing our fund shareholders with principal stability, credit quality and current income, although no guarantees can be given." Legg Mason had $950 billion in assets under management as of March 31.