Hartford Financial Services Group Inc. announced pricing Thursday for $1.1 billion in senior debt it will offer as part of a plan to repay $3.4 billion it received from the federal financial bailout.
The insurance company says $425 million from the offering will go to the Treasury Department. The rest of the proceeds from the sale described Thursday will go toward existing senior debt due in 2010 and 2011.
The public offering consists of $300 million in five-year senior notes at 4.0 percent; $500 million of 10-year senior notes at 5.5 percent and $300 million in 30-year senior notes at 6.625 percent.
The offering is part of $3.05 billion in securities the Hartford said Tuesday that it plans to offer.
The plan to repay Treasury also includes $1.45 billion in common stock, $500 million in convertible preferred stock and some cash the Hartford already has on hand.
The company will need approval from regulators before it can repay the money.
At the height of the financial crisis in the fall of 2008, the government committed $700 billion of taxpayer funds to help banks in the so-called Troubled Asset Relief Program, or TARP. Hundreds of U.S. banks participated and received a cash investment from the Treasury Department in exchange for preferred stock. Many financial institutions have been raising money in the capital markets to repay their shares.
The program officially ends in October.
After its repayment, Hartford Financial said, the Treasury Department will continue to hold warrants to buy about 52 million shares of its common stock at an exercise price of $9.79 a share. The company said it doesn't intend to repurchase the warrants. Hartford Financial shares finished at $27.84 in trading Tuesday, down 74 cents, or 2.6 percent, from Wednesday.
Goldman Sachs & Co., JPMorgan Securities Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Wells Fargo Securities LLC will be managers for the securities offering.
In January 2009 the Office of Thrift Supervision, a Treasury Department agency, approved applications from Hartford Financial and other insurers and financial services firms to acquire existing savings and loans and thereby become thrift holding companies. That made them eligible to apply for a piece of the $700 billion in federal rescue funds.
The moves came at a time when insurers, hit hard by the financial meltdown, saw their shares plunge and feared that growing investment losses could cripple the industry further.
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