Treasury sells warrants of Connecticut-based bank

AP News
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Posted: Jun 03, 2011 8:57 AM
Treasury sells warrants of Connecticut-based bank

The government says it received $20.4 million from the sale of warrants it held in Webster Financial Corp., the latest move to recoup costs from the $700 billion financial bailout program.

The Treasury Department said Friday it received $6.30 for each warrant in the auction that took place on Thursday. Treasury had set a minimum bid price of $5.50 per warrant. Buyers of the 3.28 million warrants will have the right to purchase Webster Financial stock at $18.28 per share.

Webster Financial, a bank based in Waterbury, Conn., received $400 million from the federal government in November 2008 at the height of the financial crisis. It completed repayment of the money in December 2010. The warrant sale severs its last link to the government's Troubled Asset Relief Program.

Stock in the company closed at $19.86 in trading Thursday. Over the past year, the price has ranged from a low of $15.56 to a high of $23.73.

With the warrants selling for $6.30 each, that will mean that the stock will have to be trading above $24.58 for the buyers of the warrants to make a profit on their purchases.

Of the $700 billion Congress authorized for the bailout program, the government ended up distributing about $411 billion.

Banks received the largest share of the bailout, approximately $245 billion. Treasury has received $253 billion in return from repayments, dividends and proceeds from the sale of warrants.

The rest of the $411 billion in bailout support was distributed to the auto companies, various housing programs and insurance giant American International Group.