Lincoln Financial Group, with operations in Hartford, said Monday it would buy back $950 million of preferred stock issued to the U.S. Treasury under the bailout program by issuing stock and debt securities, Reuters reports.
The large U.S. life insurer, known formally as Lincoln National Corp., will offer $335 million of common stock and up to $750 million of senior notes, it said in a statement.
The repurchase will be funded by the common stock offering, $250 million senior notes offering and cash in hand, the company said.
Proceeds of up to $500 million from the senior notes offering will be used to support universal life reserves of its insurance subsidiaries.
The Treasury still holds warrants to buy 13 million shares of Lincoln Financial at an exercise price of $10.92 per share, but Lincoln does not intend to buy them back.
The U.S. Treasury came out with a massive program at the peak of the financial meltdown to support ailing financial institutions, but companies are now looking to exit the program as it enforces several restrictions on dividend payments and executive compensation.
The TARP announcement comes days after Lincoln said last Thursday that it closed on a new $2 billion bank credit facility.
The new agreement replaces an existing facility, which was set to expire in the first quarter of next year.
Lincoln was up $1.27, or 4.8 percent, to $27.63 in late morning trading.
