Lincoln Goes on Capital-Raising Spree

Monday morning started off with a bang as Lincoln National(LNC Quote) announced it plans to raise capital through a combination of stock and debt and said it would draw on the government's financial lifeline.

Lincoln said it intends to raise more than $2 billion in fresh capital, thanks in part to a $600 million stock offering. Underwriters have a 30-day option to buy another 15% of shares.

The life insurance and financial planning concern also plans to raise capital through a $500 million senior debt offering.

But the headline grabber may be the company's decision to accept as much as $950 million in capital, with preferred shares issued under the U.S. Treasury's Capital Purchase Program.

Lincoln said it intends to contribute about half of the total proceeds to Lincoln National Life Insurance, its principal insurance subsidiary. The other $1 billion will be used for general corporate purposes such as paying off debt and business investments.

On Friday, competitor Hartford Financial Services(HIG Quote) said it could take on as much as $3.4 billion in funds from the Troubled Asset Relief Program and also would offer shares worth $750 million.

Lincoln nosedived just after the opening bell following the news, with shares changing hands down 7.7% to $16.39.