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Treasury Announces Intent to Sell Preferred Stock and Subordinated Debt Positions

 

Feb 5 - As part of its ongoing efforts to wind down and recover its remaining Capital Purchase Program investments under the Troubled Asset Relief Program, the U.S. Department of the Treasury today announced its intention to sell several preferred stock and subordinated debt CPP investments.  Treasury intends to conduct auctions for all of its preferred stock and subordinated debt positions (the CPP Securities) in the following six institutions:

These auctions are part of  a series of auctions that will include the CPP Securities of the 53 financial institutions included in Treasury’s Dec. 18, 2012, announcement and are part of the overall strategy that Treasury outlined for winding down its remaining TARP bank investments in a way that protects taxpayer interests, promotes financial stability, and preserves the strength of our nation’s community banks. Treasury indicated that it intends to use a combination of repayments, restructurings, and sales to manage and recover those remaining investments.
 
TARP’s bank programs have already earned a significant profit for taxpayers. To date, Treasury has recovered nearly $268 billion from TARP’s bank programs through repayments, dividends, interest, and other income – compared to the $245 billion initially invested.  Treasury has remaining outstanding CPP investments in 199 institutions.
 
Treasury expects to commence the auctions, which will be offered principally to domestic qualified institutional buyers and certain domestic institutional accredited investors, on or about Feb. 6, 2013. These offerings will be executed using a modified Dutch auction methodology that establishes a market price by allowing investors to submit bids at specified increments similar to the process Treasury used to auction other CPP investments. The auction procedures will not include the submission of “all or none” bids.
 
The CPP Securities that will be sold in the auction have not been and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the benefit of, U.S. persons absent registration under, or an applicable exemption from, the registration requirements of the Act and applicable state securities law.  The CPP Securities will be offered only to (1) domestic “qualified institutional buyers” as defined in Rule 144A under the Act, (2) certain domestic institutional “accredited investors” as defined in Rule 501(a) under the Act that have total assets of not less than $25,000,000 and (3) in certain cases, certain directors and executive officers of the respective issuers of the CPP Securities. 


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