Wells Fargo & Co. said Tuesday it will sell stock for $25 per share to help repay $25 billion in government bailout money.
The pricing terms were announced a day after Wells Fargo said it would repay the money it received as part of the Troubled Asset Relief Program.
The offering price represented a 1.9 percent discount from Monday's closing price of $25.49. Shares of Wells Fargo rose 40 cents to $25.89 in early morning trading Tuesday.
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 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.
Wells Fargo will raise $10.65 billion through the stock offering of 426 million shares of common stock. The bank had 4.69 billion shares of common stock outstanding as of Oct. 30. The bank expects to close the stock sale on Friday.
Another 63.9 million shares of common stock could be sold in the next month to cover over-allotments. If Wells Fargo sells those shares, it would raise an additional $1.6 billion.
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 bank is also planning to raise $1.5 billion through assets sales by the end of 2010. If it doesn't raise that much money during the next year, it will offset any shortfall by issuing more stock.