Wells Fargo stock offering to raise $12.25 billion
NEW YORK (AP) – Wells Fargo & Co. said Tuesday that a stock offering planned for later this week should raise $12.25 billion that will be used to help repay its government bailout loan.
The offering price of $25 a share was announced a day after Wells Fargo said it would repay the $25 billion it received as part of the Troubled Asset Relief Program.
The offering is expected to close on Friday, Wells Fargo said. It will raise $10.65 billion from selling 426 million shares of common stock, and another $1.6 billion from selling another 63.9 million shares to underwriters, bringing the total offering to 489.9 million shares.
The offering will increase the bank’s shares outstanding by about 10.4 percent from the 4.69 billion shares of common stock outstanding as of Oct. 30. Wells Fargo’s shares rose 17 cents to close at $25.66 on Tuesday.
“We are very pleased with the positive reception for this equity offering, and we appreciate the confidence investors have demonstrated in Wells Fargo’s strength and future prospects,” Chief Financial Officer Howard Atkins said in a prepared statement.
Wells Fargo was the last of the initial eight banks that received TARP money to announce it would repay the government. The San Francisco-based bank’s announcement on Monday came just hours after Citigroup Inc. said it would repay $20 billion in TARP money and the government would sell its nearly 34-percent stake in the bank.
By repaying TARP, Wells Fargo escapes restrictions like caps on executive compensation and dividends. It will also save the bank $1.25 billion annually in interest payments it had to pay the government for the money.
Aside from the stock sale, Wells Fargo also is issuing $1.35 billion in stock to employees instead of giving them cash bonuses. The TARP compensation restrictions affected the size of cash salary and bonuses banks could award their executives.
The size of the stock offering means Wells Fargo will no longer need to raise $1.5 billion through assets sales by the end of 2010, the bank said.