Treasury schedules auction of CPP preferreds from four financial firms

By Toni Weeks

San Luis Obispo, Calif., Nov. 14 – The U.S. Department of the Treasury announced that it plans to sell preferred stock in an effort to recover its remaining Capital Purchase Program investments and wind down its Troubled Asset Relief Program.

According to a notice, the company intends to conduct auctions for all of its preferred stock positions in First United Corp., Liberty Shares, Inc., Lone Star Bank and Porter Bancorp, Inc.

Treasury expects the auctions to begin on Nov. 17 and end at 6 p.m. ET on Nov. 20. The offerings will be executed using a modified Dutch auction methodology that establishes a market price by allowing investors to submit bids at specified increments, similar to the process Treasury used to auction other CPP investments. The auction will not include the submission of “all or none” bids.

The securities will be offered principally to domestic qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933, as amended, and some domestic institutional accredited investors.

According to the notice, Treasury will continue to use a combination of repayments, restructurings and sales to manage and recover its remaining assets with a goal of protecting taxpayer interests, promoting financial stability and preserving the strength of the nation’s community banks.

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