Student lender Sallie Mae said it would sell US$2.5 billion in stock and use most of the proceeds to settle contracts requiring the company to buy back stock at prices above current levels.
The Reston, Virginia, company, officially called SLM Corp, last week saw its shares sink to a five year low after the company's chief executive failed to provide enough details about the company's plans in the wake of a failed US$25 billion buyout deal.
Sallie Mae has been trying to close out share repurchase agreements known as equity forward contracts. They allowed the company to profit from rising share prices, but turned into a problem when the company's share price fell.
The firm said on Wednesday that it would use about US$2 billion raised through the offering to buy back 44 million of its shares.
The remainder would be used for general corporate purposes, it said.
The offerings are set to include US$1.5 billion in common stock and US$1 billion preferred stock that will convert into common stock, Sallie Mae said in a statement.
While the offering will dilute the value of shares, the company said the impact will be "partially offset" by the share repurchases. UBS AG and Citigroup Inc are jointly running the offerings.
Sallie Mae's chief executive, Albert Lord, was widely criticized last week after a conference call in which he dismissed several analysts' questions and ended the call with an expletive.
A student-loan law that took effect on Oct. 1 cut billions of dollars in federal subsidies for student lenders like Sallie, which lost US$344 million in the third quarter.
Moreover, defaults are mounting on student loans, while credit-market tremors similar to those linked to the mortgage crisis have begun to show up in the US$85 billion student-loan market.
Earlier this year, a group of investors led by private-equity firm J.C. Flowers & Co reneged on its offer to buy Sallie in part because of the new law reducing federal subsidies.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to