Zions Bancorporation (ZION) will raise up to $250 million in fresh capital to redeem outstanding preferred shares, including stock issued to the Treasury Department from the Troubled Asset Relief Program.

The $52.6 billion-asset company said Tuesday that it will auction off $100 million of senior notes starting on Wednesday and closing on Thursday. This will increase the outstanding amount of 4.5% notes issued last month and due in March 2017 to $400 million.

Zions expects to use the proceeds from this offering for general corporate purposes, which may include the partial repurchase of its remaining preferred stock held by the Treasury Department and the redemption of senior floating rate notes due in June.

The Salt Lake City company has repaid $700 million of its Tarp funds and has said that it would repurchase the remaining $700 million worth of shares later this year.

Additionally, Zions said that it will auction off up to $150 million of a new series of Tier 1 capital qualifying perpetual preferred stock. The bank will use the proceeds from this sale to redeem outstanding shares of its series E preferred stock. The series E securities, which have a value of $142.5 million, are callable in June and notice of redemption must be given at least 30 days prior to then, Zions said.

Zions' shares were down 3.9% in heavy trading late Tuesday, to $20.

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