In order to repay part of the $1.2 billion funds it got from the US government under the Troubled Asset Relief Program (TARP), the credit-card company Discover Financial Services intends selling its new common stock. In addition, the company also divulged its plan of offering senior notes in the near future.

With its market capitalization nearing $5 billion, Discover said the proposed new stock offering will consist of a 15% over-allotment preference for the underwriters.

Announcing the decision about sale of new shares move on Monday, Discover said that the stock offering will help the company raise $500 million, which will go towards buying back the preferred stock issued under the Capital Purchase Program by the US Treasury.

However, the credit-card company, which had converted itself into a bank holding company to gain access to government support, added that it would require regulatory approval to go ahead with the TARP repayment.

Discover said that part of the $500 million raised from the common-stock sale will also be used for “general corporate purposes” - including driving capital into its Discover Bank unit, which provides online savings, money-market accounts and certificates of deposit. Other areas in which the funds may likely be used comprise capital contributions to Discover Bank as well as investments in the company's business.