Lincoln National Corporation has initiated concurrent, separate offers to purchase up to $500 million in aggregate liquidation preference of its outstanding depositary shares. This strategic move involves two distinct series of preferred stock: the 9.250% Fixed Rate Reset Non-Cumulative Series C and the 9.000% Non-Cumulative Series D. The company intends to execute these buybacks using cash on hand, targeting a settlement date of September 10, 2026. For institutional investors and financial infrastructure stakeholders, this represents a significant capital reallocation effort aimed at reducing the company's preferred equity obligations. The offers are structured with specific priority levels, ensuring that Series C shares are prioritized for acquisition should the total tendered amount exceed the $500 million cap. This announcement signals a proactive approach to managing the company's capital structure and liquidity profile through direct market engagement.
Lincoln Financial Series C and D Buyback Terms
The company has outlined specific financial terms for each series of depositary shares involved in the offer. For the Series C Depositary Shares, which represent a 1/25th interest in a share of 9.250% Fixed Rate Reset Non-Cumulative Preferred Stock, the offer price is set at $1,055.00 per $1,000.00 of liquidation preference. This includes a hypothetical accrued dividend of $2.31 per share. These shares hold the highest acceptance priority level.
For the Series D Depositary Shares, which represent a 1/1,000th interest in a share of 9.000% Non-Cumulative Preferred Stock, the offer price is $26.30 per $25.00 of liquidation preference. This includes a hypothetical accrued dividend of $0.06 per share. These shares are listed on the New York Stock Exchange under the symbol "LNC PRD" and hold the second level of acceptance priority.
The total consideration for validly tendered shares will include the offer price plus accrued dividends up to, but not including, the settlement date. If the aggregate liquidation preference of tendered shares exceeds the $500 million maximum, Lincoln National Corporation will first satisfy all validly tendered Series C shares. Any remaining portion of the $500 million limit will then be applied to Series D shares, which may be subject to proration. The offers are scheduled to expire at 5:00 p.m. New York City time on September 8, 2026, unless extended or terminated by the company.
Capital Management and Liquidity Strategy
Lincoln National Corporation is utilizing cash on hand to fund this $500 million aggregate liquidation preference purchase, indicating a strong liquidity position. The decision to execute these offers concurrently but separately allows the company to manage its capital structure with precision. By targeting specific series of preferred stock, the company can address different layers of its equity obligations.
The structure of the offers provides a clear hierarchy for capital deployment. The Series C shares, which carry a higher interest rate of 9.250%, are prioritized for purchase. This suggests a strategic intent to retire higher-cost capital first. The Series D shares, carrying a 9.000% rate, serve as the secondary tier in this capital reallocation plan.
This move is not contingent upon securing external financing or meeting a minimum tender threshold, which provides the company with greater certainty in its execution. The board of directors has already approved these offers, though the company maintains the right to waive conditions, extend the expiration date, or terminate the offers at its discretion. For financial institutions and market participants, the involvement of major dealer managers—including BNP Paribas, Morgan Stanley, Wells Fargo, and J.P. Morgan—underscores the scale and institutional nature of this transaction. The use of cash on hand rather than new debt to fund the buyback reflects a focused effort to optimize the balance sheet without increasing leverage.
Key Takeaways
- Lincoln National Corporation is offering to purchase up to $500 million in aggregate liquidation preference of Series C and Series D depositary shares.
- Series C shares, representing a 1/25th interest in 9.250% Fixed Rate Reset Non-Cumulative Preferred Stock, have the highest acceptance priority.
- The company intends to settle the offers on September 10, 2026, using cash on hand.
FinanceInsyte's Take
In our view, Lincoln National Corporation’s decision to deploy up to $500 million in cash to retire specific preferred equity series is a calculated move to optimize its weighted average cost of capital. By prioritizing the 9.250% Series C shares, the company is systematically removing its most expensive non-cumulative preferred obligations from the balance sheet. This suggests a strategic focus on improving equity efficiency and streamlining the capital structure.
The use of cash on hand, rather than issuing new debt to fund the buyback, is a significant signal of liquidity strength. It demonstrates that the company has sufficient internal capital to execute large-scale equity retirements without increasing its leverage profile. For institutional investors, the proration mechanism for Series D shares provides a clear framework for understanding how capital will be allocated if demand exceeds the $500 million cap. This structured approach to capital management indicates a disciplined approach to managing shareholder equity and long-term financial resilience.
Questions & Answers
How will Lincoln National Corporation prioritize the purchase of different share series if the $500 million limit is exceeded?
The company has established a clear acceptance priority. All validly tendered Series C Depositary Shares will be accepted first. If the aggregate liquidation preference of Series C shares leaves remaining funds within the $500 million limit, the company will then purchase Series D Depositary Shares, which may be subject to proration.
What is the total consideration being offered per share for the Series C and Series D depositary shares?
For Series C, the total consideration is $1,057.31 per $1,000.00 of liquidation preference (comprising a $1,055.00 offer price and $2.31 in hypothetical accrued dividends). For Series D, the total consideration is $26.36 per $25.00 of liquidation preference (comprising a $26.30 offer price and $0.06 in hypothetical accrued dividends).
What is the deadline for holders to tender their depositary shares?
Holders must submit their tenders before the expiration date, which is 5:00 p.m. New York City time on September 8, 2026, unless the company chooses to extend or terminate the offers.
Does the company need to secure new financing to complete this $500 million buyback?
No. The company has explicitly stated that the offers are not contingent upon the receipt of financing and that it intends to pay for the purchased depositary shares using cash on hand.
Source: BUSINESSWIRE
