The U.S. Treasury Department announced Tuesday it plans to auction off 12.66 million warrants it holds for stock in Capital One Financial Corp (NYSE: COF). The credit card company received $3.55 billion in government bailout money last year in exchange for preferred share and warrants.
Capital One has since paid back the government funds received. Now, the Treasury is looking to unload the warrants, which can be converted in common stock, as it closes out its investment in the card issuer.
“The proceeds of this sale will provide an additional return to the American taxpayer from Treasury´s investment in the Company beyond the dividend payments it received on the related preferred stock,” the Treasury Department stated in a press release.
The auction is open to the public and each purchaser received the right to one Capital One share for each warrant owned at an exercise price of $42.13. The warrants are valid until November 14, 2018.
Shares of Capital One, which are up about 19 percent this year, closed just above $38 on Tuesday.
The Treasury Department had previously announced it was considering auctioning off the warrants received from Capital One, along with two other large banks, which are now know to be JP Morgan Chase (NYSE: JPM) and TCF Financial Corp (NYSE: TCB).
Those two financial institutions have since settled up on the funds received from the Treasury, purchasing all preferred stock issued. If the Treasury auctions of their warrants, that will end its investment in both companies.
