Midwest Banc plans exchange offer for convertible perpetual preferreds

By Angela McDaniels

Tacoma, Wash., Aug. 3 - Midwest Banc Holdings, Inc. plans to hold an exchange offer for the depositary shares representing its series A non-cumulative redeemable convertible perpetual preferred stock, according to an S-4 filing with the Securities and Exchange Commission.

Each depositary share has a liquidation amount of $25 and represents a 1/100th interest in a share of the convertible preferred stock.

The company will issue up to 15 million shares of its common stock in the offer.

Midwest will also seek approval to amend the certificate of designation of the preferreds to eliminate the requirements that:

• Full dividends must have been paid on the preferreds before the company can pay dividends on its common stock or any other securities junior to the preferreds;

• If full dividends are not paid in full on the preferreds, dividends on all series of stock ranking equally with the preferreds must be declared on a proportional basis;

• A series of preferred stock ranking equally with the preferreds cannot be issued without the approval of holders of the depositary shares if the new series will have cumulative dividends; and

• No dividends will be paid or declared on any particular series of preferred stock unless dividends are paid or declared pro rata on all shares of outstanding preferred stock that rank equally as far as dividends.

The amendments would also eliminate the right of holders of depositary shares to elect two directors if dividends have not been paid for six quarterly dividend periods.

Finally, the company is also seeking approval to issue a senior class of mandatorily convertible preferred stock to the U.S. Treasury in exchange for the existing series T preferreds.

Holders who tender must consent to the changes.

Midwest said the proposed exchange offer is part of its larger capital plan designed to increase its common equity capital so that it can withstand continued and potentially more adverse economic conditions and credit scenarios.

Illinois Stock Transfer Co. (800 757-5755) will be the exchange agent, and Morrow & Co., LLC (800 483-1314 or, for banks and brokerage firms, 203 658-9400) will be the information agent.

Melrose Park, Ill.-based Midwest Banc is a commercial bank.

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