Sallie Mae Plans $2.5 Billion Stock Offering

In an effort to rcover from the failed LBO and other troubles of its own making, Sallie Mae announced it would try to raise $2.5 billion by selling common and convertible preferred stock.  It needs money to pay off commitments to buy back its shares.  Known as equity forward contracts, they are bets that the company's stock will rise in price -- a bet that Sallie Mae has lost.  As a result, it needs about $2 billion to buy about 44 million of its shares from Citibank.  It also needs additional cash to improve its credit rating.  WPost, Sallie Mae Bids to Raise $2.5 Billion In Stock Sale; NYTimes, Sallie Mae to Sell Stock to Pay Off a Failed Bet ;WSJ, Sallie Mae Plans $2.5 Billion Stock Offering.