Summary
On December 23, 2008, American Express Company (AXP) announced it received preliminary approval from the U.S. Department of the Treasury to participate in the Troubled Asset Relief Program (TARP) Capital Purchase Program. This participation involves the sale of approximately $3.39 billion in preferred stock and warrants to the Treasury. This move signifies AXP's engagement with government support during a period of significant financial market stress in late 2008. The preferred stock will carry a dividend rate of 5% annually for the first five years, increasing to 9% thereafter. This transaction, subject to standard closing conditions, provides AXP with capital infusion to navigate the challenging economic environment, aiming to bolster its financial stability and investor confidence.
Key Highlights
- 1AXP received preliminary approval from the U.S. Department of the Treasury to participate in the TARP Capital Purchase Program.
- 2The company expects to issue and sell preferred stock and warrants to the Treasury.
- 3The aggregate purchase price for the preferred stock and warrants is approximately $3.39 billion.
- 4This capital injection is intended to strengthen AXP's financial position during a period of market stress.
- 5The preferred stock will pay a 5% annual dividend for the first five years, then 9% thereafter.
- 6The transaction is subject to standard closing conditions set forth in the Program's investment documentation.