First BanCorp gets tenders for $487.1 million of perpetual preferreds

By Susanna Moon

Chicago, Aug. 26 - First BanCorp said investors tendered $487.1 million, or 88.54%, of preferreds in its offer to exchange up to 256,401,610 newly issued common shares for five series of its noncumulative perpetual monthly income preferred stock.

As a result, First BanCorp will issue about 227 million new common shares.

The following series of preferreds were covered by the offer:

• $90 million of 7.125% noncumulative perpetual monthly income preferred stock, series A;

• $75 million of 8.35% noncumulative perpetual monthly income preferred stock, series B;

• $103.5 million of 7.4% noncumulative perpetual monthly income preferred stock, series C;

• $92 million of 7.25% noncumulative perpetual monthly income preferred stock, series D; and

• $189.6 million of 7% noncumulative perpetual monthly income preferred stock, series E.

The exchange offer expired at 9:30 a.m. ET on Aug. 25. It began on July 16.

Settlement is expected to occur on Aug. 27.

The liquidation preference per preferred is $25.

The company will issue 11.6525 common shares for each preferred tendered in the exchange offer, and the relevant price was fixed at $1.18 on Aug. 20.

The exchange ratio was based on an exchange value of $13.75 per preferred divided by $1.18. The price was to be the higher of $1.18 and the average volume-weighted average price of common shares during the five-trading-day-period ending on the second business day immediately preceding the expiration date of the exchange offer.

The closing stock price on Aug. 20 was $0.51 (NYSE: FBP).

The breakdown for preferreds tendered and new shares issued is as follows:

• $78,745,125 of 7.125% preferreds tendered, resulting in the issue of 36,703,103 shares;

• $63,100,325 of 8.35% preferreds tendered, resulting in the issue of 29,411,061 shares;

• $91,984,725 of 7.4% preferreds tendered, resulting in the issue of 42,874,080 shares;

• $79,235,200 of 7.25% preferreds tendered, resulting in the issue of 36,931,527 shares; and

• $173,987,825 of 7% preferreds tendered, resulting in the issue of 81,095,725 shares.

"The successful exchange will result in improving our tangible common equity ratio as of June 30, 2010, on a pro forma basis, to approximately 5.22%," Aurelio Aleman, president and chief executive officer of the company, said in a press release.

"This is a significant step towards the execution of our capital plan, and we thank our shareholders for their support in this exchange offer. For the immediate future, a capital raise continues to be our focus."

First BanCorp announced the preliminary results of the offer on Aug. 25. The company said it had obtained tenders for $483.5 million, or 87.9%, of the total liquidation preference of the five series of preferreds.

As a result, the company expected to issue 225.3 million new First BanCorp common shares.

"The high participation rate of our preferred stockholders in the exchange of preferred stock for common stock would satisfy one of the substantive conditions of the agreement with the U.S. Treasury to convert the fixed-rate cumulative mandatorily convertible preferred stock, series G, into shares of common stock," Aleman said in a previous news release.

UBS Investment Bank (888 719-4210 or collect 203 719-4210) was the dealer manager, and BNY Mellon Shareowner Services (800 777-3674 or collect 201 680-6579) was the exchange agent and information agent.

First BanCorp is the bank holding company for FirstBank Puerto Rico. It is based in Santurce, Puerto Rico.

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