Discover Financial Receives $1.2 Billion Under Treasury Program
Under the deal, Discover issued and sold to the Treasury 1,224,558 shares of its preferred stock and a ten-year warrant to purchase 20,500,413 shares of its common stock at an exercise price of $8.96 per share. The preferred stock will pay cumulative dividends at a rate of five percent per annum for the first five years, and 9 percent per annum thereafter.
Immediately prior to the issuance of the preferred stock and the warrant, Discover Financial Services became a bank holding company under the Bank Holding Company Act of 1956 and a financial holding company under the Gramm-Leach-Bliley Act.
Riverwoods, Illinois-based Discover Financial Services is a credit card issuer and electronic payment services company. The company operates the Discover Card, and offers student and personal loans, as well as savings products such as certificates of deposit and money market accounts.
Discover's payments businesses consist of the Discover Network, Pulse, and Diners Club International, a global payments network with acceptance in 185 countries and territories.
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