Hartford Financial Services (HIG) Borrows $3.4 Billion From U.S. Treasury
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The Hartford Financial Services Group, Inc. (NYSE: HIG) has closed on a definitive investment agreement for its participation in the United States Department of Treasury's Capital Purchase Program (CPP) in the amount of $3.4 billion in perpetual preferred stock of the company.
"This investment further enhances our financial flexibility and our capacity to weather significant deterioration in the equity and debt markets, as well as the general economy," said Ramani Ayer, chairman and chief executive officer of The Hartford. "We have recently taken a number of critical steps to set the company on a strategic course to build value for our partners, shareholders, employees and distributors. We are pleased that rating agencies and others have responded positively to these actions and the added financial flexibility provided by the CPP investment."
Under the agreement, Treasury's investment in the company is in the form of non-voting senior preferred shares with a cumulative annual dividend of 5 percent for the first five years and 9%thereafter. Treasury also received warrants to purchase common stock equal to 15% of the preferred investment, or $510 million. The exercise price of the warrants is $9.79 per share, equal to the average closing price of The Hartford's common stock in the 20 trading days preceding the date of Treasury's preliminary approval of The Hartford's participation in the CPP. [SM]
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