Sallie Mae Sells Off Stock, Securities

In a move to help it pay off bad bets on derivatives, Sallie Mae, the largest student loan lending company in the U.S., announced Thursday it had sold $2 billion of common stock and $1 billion of convertible securities, according to Reuters. About $2 billion of the proceeds will be used to pay off derivatives known as equity forward contracts, said Sallie Mae, formally known as the SLM Corporation. The company used equity forwards for years as part of its share buyback plan, allowing it to reduce the cost of buying back shares as long as its stock price continued to rise. Stock prices fell and Sallie Mae was forced to buy back a large number of shares at above-market prices. Last week, Sallie Mae's closing share price was $19.65.