Wells Fargo Prices $10.6Bn Stock Offering to Repay TARP
Wells Fargo & Co. (WFC) has priced a $10.65bn offering of 426m shares of common stock at $25 per share. The underwriters -- led by Wells Fargo Securities and Goldman Sachs & Co. -- have a 30-day option to purchase up to an additional 63.9m shares of common stock to cover over-allotments. The closing is expected on or about Dec. 18, 2009, according to a statement. The capital raise is part of Wells' plans to repay the $25bn of funds the Treasury Department invested through the Troubled Asset Relief Program (TARP). Under the terms of the repayment agreement, Wells will also raise $1.35bn through the issuance of common stock to Wells Fargo benefit plans and in lieu of a portion of '09 incentive cash and other compensation to employees. Wells also will increase equity by $1.5bn through asset sales. Wells said on Monday it expects a 6.2% common equity ratio after the TARP repayment. “Over the last decade Wells Fargo maintained capital ratios above peer levels, one of the main reasons we have been able to continue to profitably grow our company – including three consecutive quarters of record profits this year – despite the credit crisis of the last two years," said chief financial officer Howard Atkins in a press statement. "Excluding the impact of TARP funds, stockholders’ equity at Sept. 30, 2009 was up $50bn from a year ago and including today’s announced capital actions, $63bn on a pro forma basis." Wells joins a wave of financial firms to recently repay or plan to repay TARP. With the latest firm to announce repayment, Citigroup (C), the administration expected to recoup 60% of the loaned funds distributed, with interest, President Barack Obama said Monday. Write to Diana Golobay.