UPDATE 2-CIBC to sell C$2.75 bln shares to offset writedowns

(Adds details. In U.S. dollars unless noted)

TORONTO Jan 14 (Reuters) - Canadian Imperial Bank of Commerce (CM.TO) said on Monday it will take almost $2.5 billion in before-tax writedowns related to the U.S. subprime mortgage crisis, and raise about C$2.75 billion in stock sales to rebuild its balance sheet.

CIBC, Canada's fifth-largest bank, said it will take a $2 billion before-tax writedown in its financial first quarter related to the subprime mortgage hedge protection it bought from ACA Financial Guaranty Corp.

As well, for the two months ended Dec 31 it will take a before-tax $462 million writedown for exposure to the U.S. residential real estate market.

After tax, the two writedowns amount to about $1.6 billion.

CIBC said it is possible that further writedowns may be required, but said it would not be provide an update until it releases its first-quarter results on Feb. 28.

It will revive its balance sheet through two stock sales.

CIBC said it has received written commitments from a group of institutional investors, including Manulife Financial Corp (MFC.TO), Caisse de depot et placement du Quebec, Cheung Kong Holdings Ltd. and OMERS Administration Corp., to buy, through a private placement, C$1.5 billion in CIBC common shares, at C$65.26 each.

In addition, CIBC said it has entered into another agreement with a syndicate of underwriters jointly led by CIBC World Markets Inc and UBS Securities Canada Inc in which they will buy C$1.25 billion in common shares at C$67.05 each for resale in a public offering.

The deal also has an over-allotment option, available for up to 30 days after closing, to purchase an additional C$187.5 million in common shares at the same price.

Gavin Graham, chief investment officer at Guardian Group of Funds, said the stock deals are positive for CIBC, and that the firm commitments from investors will ensure the bank will have enough capital regardless of any further writeoffs that may occur.

"The fact that they've got the Caisse, Li Ka-shing and Manulife willing to put in half a billion there and a quarter billion there is a pretty positive long-term sign, which I'm sure they'll do very well on, as indeed you would have done if you had bought CIBC after the Enron writeoffs a couple years ago," Graham said.

Shares of CIBC had been trading at C$72.07, up 76 Canadian cents, before being halted on the Toronto Stock Exchange. The stock has tumbled more than 30 percent from its year high reached in May of last year.

CIBC, which has the biggest exposure to the troubled U.S. subprime mortgage market of any Canadian bank, had previously warned of a "large charge" in its first-quarter results but had not given a specific number.

The bank also said it has real estate exposure with protection bought from other financial guarantors against which no additional writedowns had been made.

CIBC said it has exposure to 11 financial guarantors where the underlying assets are unrelated to the U.S. housing market. It valued this exposure at about C$750 million as of the end of December. ($1=$1.02 Canadian) (Reporting by Leah Schnurr; Editing by Peter Galloway)