The Treasury Department announced it will auction 52 million warrants it holds from Hartford Financial Services Group on Tuesday, The Associated Press reports. It is the latest effort to recoup costs of the $700 billion financial bailout.
In its announcement Monday, Treasury set a minimum bid price of $10.50 per warrant. A warrant gives the purchaser the right to buy common stock at a fixed price.
The government obtained the warrants when it provided The Hartford $3.4 billion in support from the bailout fund in June 2009. That was done to help shore up its capital position during the financial crisis.
Sale of the warrants will sever the remaining ties Hartford Financial has with the bailout fund, known as the Troubled Asset Relief Program. Financial institutions have been eager to cut all ties to the TARP to escape various restrictions, including limits on dividend payments and executive compensation.
By purchasing the warrants, holders will have the right to buy an equal amount of shares of Hartford Financial at a price of $9.79.
Hartford Financial stock closed on Friday at $22.50 and over the past year has traded in a range of $18.81 to $30.46.
Last week, Treasury received $213.7 million in net proceeds from the sale of warrants it held in Lincoln National Corp. Treasury set a minimum bid price of $13.50 for the Lincoln National warrants. It sold them for $16.60 per warrant at the auction.
The government stepped in to help the insurance companies after they incurred large investment losses during the financial crisis.
