With a credit rating bordering on junk-bond status, embattled student loan provider Sallie Mae plans a public stock offering to raise $2.5 billion, reports the Wall Street Journal. The company will use $2 billion to buy back its own stock futures, which have lost value recently following a failed attempt to take the company private.
Investors, who originally anticipated Sallie Mae to spend between $1 billion and $1.6 billion on the purchases, were disappointed in the news and in after-market trading Sallie Mae shares lost $1.44, or 6.5%. Earlier this year, shares traded as high as $58. Current investors worry the sale of common and preferred stock will further dilute their current holdings value.