The company sold 101.78 million shares of its common stock at a price of $19.65 per share and one million shares of its 7.25% mandatory convertible preferred stock, series C. Each share of mandatory convertible preferred stock, series C, has a $1,000 liquidation preference and is subject to mandatory conversion on December 15, 2010, into between 41.72 and 50.89 shares of the company’s common stock, unless previously converted at the option of the holder.
Sallie Mae intends to use approximately $2 billion of the net proceeds to settle its outstanding equity forward contract with Citibank and repurchase the 44.04 million shares of common stock deliverable to Sallie Mae under the contract. The company and Citibank have agreed to physically settle the contract, and the company has paid Citibank approximately $1.1 billion, the difference between the contract purchase price and the previous market closing price on the 44 million shares. The company will pay Citibank the remaining balance due under the contract in early January 2008.
The remaining proceeds from the public offerings will be used for general corporate purposes. UBS Investment Bank and Citi acted as joint book-running managers for the offerings.
