Posted on 16 Jun 2010
Lincoln National Corp. plans to sell more than $1 billion in stock and debt to repay the federal government for a bailout it received last year.
The life insurance and financial services company, with headquarters in Radnor, Pa., is marketed to customers as Lincoln Financial Group and employs about 600 in Hartford, Connecticut.
Lincoln National announced Monday plans to repurchase the U.S. Treasury's preferred shares, worth $950 million, issued under the Treasury's Capital Purchase Program. The company's stock was up 47 cents, to $27.88, Tuesday on the New York Stock Exchange.
Lincoln National will buy back the shares using net proceeds from a $335 million common-stock offering, a $250 million senior-notes offering and cash.
An additional $500 million in senior notes will be used as a long-term financing solution to support reserves of the company's insurance subsidiaries, the company said.
"As we have said, we ended the year in a strong capital position, and our first quarter results reflected the strength of our business model," said CEO Dennis R. Glass. "The repurchase of the CPP preferred shares combined with securing long-term financing for a portion of our life insurance reserves completes a series of capital initiatives in support of our strong ratings and gives us additional financial flexibility as we look to invest in our core businesses."
The Treasury will still hold warrants -- a right to buy -- for about 13 million shares of Lincoln National's common stock at an exercise price of $10.92. The company doesn't plan to buy back the warrants, which, at Tuesday's closing stock price, could be sold for a profit of about $220.5 million.