This afternoon, 12/2/08, Colonial Bancgroup ( CNB ) is exploding to the upside as the Treasury is giving the company $550 million. CNB is one of the biggest gainers for December 2, 2008, in the stock market. CNB Stock is up 50% to $3.00 per share.
The Colonial BancGroup, Inc. (CNB) today announced that it has received preliminary approval to participate in the United States Treasury Department's capital purchase program. Colonial BancGroup will receive $550 million from the Emergency Economic Stabilization Act of 2008 aimed at enhancing the economy by restoring liquidity and increasing financing to businesses and consumers. The preliminary approval is subject to certain conditions and the execution of definitive agreements.
In exchange for its investment, the Treasury will receive shares of Colonial BancGroup preferred stock which will pay a 5% dividend for the first five years. If the shares are not redeemed by Colonial within five years, Colonial will pay the government dividends at a 9% annual rate. The U.S. Treasury will also receive warrants to purchase shares of Colonial BancGroup common stock for 10 years.
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