The Treasury Department will recoup some the money it spent on the Troubled Asset Relief Program by auctioning warrants to buy nearly 12.7 million shares of common stock in Capital One Financial Corp.
The Treasury got the warrants, along with preferred stock, when it provided Capital One with $3.55 billion in aid last November.
Capital One repaid the goverment and redeemed the preferred stock earlier this year.
Deutsche Bank Securities Inc. will conduct the auction Thursday on the Treasury's behalf. Each of the warrants allows the holder to buy one share of Capital One's stock, at a price of $42.13 a share.
The company's stock closed Tuesday at $38.09. That compares with $31.19 on the day that it took the TARP money.
Because it is difficult to pin a precise value on warrants that cannot yet be exercised at a profit, the Treasury has decided to establish fair prices through an auction process. For the Capital One sale, it set a minimum bid of $7.50 per warrant.
At that price, the Capital One warrants would fetch roughly $95 million.
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