After about a month of hibernation from the blogosphere, lemme try this again.
One of the last few banks to still hold taxpayer money has completed its stock sale amounting to $19.29bn yesterday after the market closed as part of its efforts to pay back the $45bn TARP fund it has received from Uncle Sam at the peak of the crisis. This was viewed positively by investors, sending the bank’s stock 7/10 of a percent higher for the day. The major indexes closed on the red.
Priced at $15 a share, a 4% discount to the closing price yesterday, the securities are divided into two components: the first being a depositary share representing interests in common equivalent junior preferred stock and the second, a “contingent warrant”. Based on the report by WSJ, these warrants “could either separate and begin to trade independently, separate and become exercisable for a month, or expire without allowing holders to exercise them.”
This kind of complex security was sought due to the need for shareholder approval of additional stock sale above the approvd 10bn level. Addition of new shares apparently will dilute the value of the stocks current shareholders own.
More about this via WSJ here.