The Treasury Department will auction 13.05 million warrants it holds from Lincoln National Corp., with operations in Hartford, on Thursday, the agency said Wednesday. It is the government’s latest effort to recoup costs of the $700 billion financial bailout, The Associated Press reports.
Treasury set a minimum bid price of $13.50 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 $950 million to Lincoln National in July 2009. The Radnor, Pa.-based company, which goes by the name Lincoln Financial Group, was one of several insurance companies receiving support in the wake of major investment losses during the financial crisis.
Lincoln paid the government back on June 30 of this year and the auction of the warrants will cut its final ties to the bailout fund, known as the Troubled Asset Relief Program.
Banks and other financial institutions have been eager to sever ties to the bailout program so they can 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 Lincoln National at a price of $10.92. Lincoln National stock closed Tuesday at $25.74 and over the past year has traded in a range of $20.65 to $33.55.
The bailout fund, which was approved by Congress in October 2008, served as a capital backstop for banks during the worst financial crisis since the 1930s. It was also used by the government to make loans to General Motors Corp., Chrysler and a number of insurance companies.
