Stock Market

SLM Corp., better known to most as Sallie Mae, is in the process of attempting to raise $2.5 billion through a new stock offering. The company plans on using the money generated to buy back 44 million in old shares. The company has a deal in place with Citigroup to purchase the old shares by Feb. 22. Currently, the company is in dire straits, as a buyout bid from outside investors fell through last summer, and sent stock prices plummeting. The shares have lost over 60% since then, and most recently closed at just over $22 per share, down from summer highs that were in the high $50s.

Unfortuately for SLM, the bad news may just be getting started. Analysts at Friedman Billings, just downgraded the stock from Outperform to Market Perform and now, according to an article on Bloomberg.com, more downgrades may be on the way. The article states:

Moody’s Investors Service in New York said last week that it was continuing to review Sallie Mae’s debt for possible downgrade. Moody’s, which had been concerned that a takeover would hurt Sallie Mae’s ability to repay debt, said it was examining the company’s “weakening financial fundamentals.’

The article also states that an outgoing VP of sales will be assured of a smooth landing, via his golden parachute, as Kevin Moehn will be getting a $1.5 million cash payment, a $285,000 bonus and a $16,500-a-month consulting contract for a job…well…done.

Filed under: Uncategorized