The Bear Stearns Companies Inc. today announced that it has offered to provide up to US$3.2 billion in secured financing to a troubled hedge fund managed by Bear Stearns Asset Management.

The financing facility, which is in the form of a collateralized repurchase agreement, will enable the the Bear Stearns High-Grade Structured Credit Fund, to replace current secured financing, improve the fund’s liquidity and facilitate an orderly de-leveraging of the fund in the marketplace, the firm says.

“Over the past few weeks, the High-Grade fund and The Bear Stearns High Grade Structured Credit Enhanced Leveraged Fund have experienced high levels of margin calls and have had difficulty in creating necessary liquidity and working capital to continue to operate the funds,” it notes. “BSAM will continue to work with creditors and counterparties of the Enhanced Fund to reduce leverage in an orderly manner and improve liquidity.”

Rich Marin, CEO of BSAM said, “We are working with counterparties to stabilize the situation by reducing the funds’ leverage and improving the liquidity. Our goal is to achieve the best possible results for the funds’ investors under the circumstances and our efforts and our discussions with counterparties are ongoing.”

James Cayne, chairman and chief executive officer of Bear Stearns commented that, “The uncertainty in the marketplace surrounding these funds has made an orderly de-leveraging difficult. By providing the facility we believe we will stabilize financing, reduce uncertainty in the marketplace and allow for an orderly process to de-leverage the High Grade Fund.”