* Warburg to buy shares at 5 pct discount
* National Penn to use money to repay TARP
* Warburg to have 16.4 pct stake in National Penn
Oct 6 (Reuters) - National Penn Bancshares NPBC.O said private equity firm Warburg Pincus will invest $150 million in the bank holding company, which it will use to repay funds received under the U.S. government’s bailout program.
The purchase of 24.8 million shares at 6.05 each offers a discount of 5 percent over the stock’s Tuesday close.
“We believe the incremental capital will accelerate our ability to repay the U.S. Treasury for its TARP investment in us,” Chief Executive of National Penn Scott Fainor said.
The company, which had received $150 million in investment in bailout funds from the U.S. government, has had its balance sheet negatively impacted by problem loans and rising provisions.
The initial investment of $63.3 million will be funded within 10 days, while the remaining investment will be made after regulatory approvals, which is expected in the fourth quarter.
As part of the investment, Michael Martin, co-head of Warburg Pincus’ financial services group, will join National Penn’s board and Warburg will have 16.4 percent stake in the company.
Sandler O‘Neill & Partners LLP served as financial advisor and Reed Smith LLP served as legal counsel to National Penn.
Shares of the Boyertown, Pennsylvania-based company closed at $6.37 on Nasdaq Tuesday. The stock has fallen 25 percent since its 12-month high on April 23, when it posted first-quarter profit after three quarters of losses. (Reporting by Sweta Singh in Bangalore; Editing by Prem Udayabhanu)