First BanCorp. begins exchange offer for five series of preferreds

By Angela McDaniels

Tacoma, Wash., Feb. 14 - First BanCorp. is offering up to 10,087,488 newly issued shares of its common stock in exchange for $63,046,800 liquidation preference of noncumulative perpetual monthly income preferred stock, according to a company news release.

The offer is being made to the holders of the company's $11,254,875 liquidation preference of 7 1/8% series A preferreds, $11,899,675 liquidation preference of 8.35% series B preferreds, $11,515,275 liquidation preference of 7.4% series C preferreds, $12,764,800 liquidation preference of 7¼% series D preferreds and $15,612,175 liquidation preference of 7% series E preferreds.

The company will issue a number of shares of common stock in exchange for each preferred accepted based on an exchange value of $20 per preferred divided by the higher of (1) the average volume-weighted average price of the common stock during the five trading days ending on the second business day immediately preceding the expiration date and (2) $5 per common share. No more than four common shares will be issued in exchange for each preferred.

The price per share for the purposes of determining the number of shares to be issued per preferred exchanged will be fixed at 4 p.m. ET on the second business day immediately preceding the expiration date and will be announced prior to 9 a.m. ET on the next business day.

The exchange offer will end at 5 p.m. ET on March 18.

To participate in the exchange offer, holders must grant a proxy permitting the proxyholders to execute a written consent in favor of an amendment that would delete the section of the preferreds' certificate of designation that allows the holders to appoint two additional members to the board of directors when the company has not paid dividends in full on the preferreds for 18 monthly dividend periods (whether consecutive or not). The holders currently have this right given that the company has not paid dividends since August 2009.

Holders of preferreds that are not tendered in the exchange offer will receive a fee of $0.25 per preferred for their proxies in favor of the amendment if the amendment is approved. No such fee will be paid for tendered preferreds, according to a schedule 14A filing with the Securities and Exchange Commission.

The exchange offer is conditioned on the holders of at least two-thirds of each series of preferreds and the holders of at least a majority of the common stock giving their consent to the preferred stock amendment.

The dealer manager is Sandler O'Neill + Partners, LP (866 805-4128 or 212 466-7807). Computershare is acting as exchange agent, and Georgeson Inc. (866 856-6388 or 212 440-9800) is acting as information agent.

First BanCorp. is based in San Juan, Puerto Rico. It is the parent corporation of FirstBank Puerto Rico, a state-chartered commercial bank.

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