As expected, Bank of America Merrill Lynch has joined the likes of JP Morgan, Morgan Stanley and Goldman Sachs in repaying US taxpayers’ their hard-earned Tarp-allocated cash.
Bank of America today sent the U.S. Treasury $45 billion to repay the U.S. taxpayers’ entire investment in the company as part of the Troubled Asset Relief Program (TARP). Repayment followed the successful completion of a securities offering.
As previously announced, the company sold 1.286 billion common equivalent securities, generating gross proceeds of approximately $19.29 billion. The offering was priced at $15.00 per common equivalent security and its proceeds, along with existing corporate funds, were used to repurchase all the preferred stock issued to the U.S. Department of the Treasury. The company also paid the government $190 million in accrued dividends on the repurchased preferred securities.
In repaying TARP, Bank of America today repurchased all 600,000 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series N; all 400,000 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series Q; and all 800,000 shares its Fixed Rate Cumulative Perpetual Preferred Stock, Series R. The U.S. Treasury continues to hold warrants to buy Bank of America common stock issued as part of the TARP investments.
“We owe taxpayers our thanks for making these funds available to the nation’s financial system and to our company during a very difficult time,” said Chief Executive Officer and President Kenneth D. Lewis. “Now that we have cleared this significant hurdle, which demonstrates the strength of our company, we look forward to continuing to play a key role in the economic recovery and helping to meet the changing needs of our customers and clients.”
There’s more about Bank of America’s future fund raising efforts — which include a proposed $3bn in asset sales and a $1.7bn issue of restricted stock — in the company’s statement on the matter.
Here’s looking at you, Citi.
On which point, CNBC said on Wednesday — citing sources — that Citi plans to pay back some of its Tarp cash by raising capital through a stock offering of as much as $20bn:
CEO Vikram Pandit has changed his travel plans to be able to announce an equity offering, which is similar to that of Bank of America, according to sources close to the situation.
According to CNBC, the announcement could come as early as Thursday.
Related links:
Tarp repayment blow for Citi – FT
Citigroup in race to repay bail-out funds – FT