Mercantile Bancorp files Chapter 11 to sell shares in Mercantile Bank

By Caroline Salls

Pittsburgh, June 28 - Mercantile Bancorp, Inc. filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Delaware and plans to sell its shares in its Mercantile Bank subsidiary.

The company said it recently found a purchaser for Mercantile Bank, and it plans to liquidate its remaining assets to maximize value for the benefit of creditors.

United Community Bancorp, Inc. is the stalking horse bidder for the Mercantile Bank shares and a related bank trademark and has agreed to purchase them for $22.28 million in cash, minus all amounts owed by the bank to the Federal Deposit Insurance Corp. in connection with a cross-guaranty liability attributable to Royal Palm Bank and Heartland Bank, all broker's fees and specified adjustments.

If United Community is not the successful bidder, Mercantile will pay it a $668,310 break-up fee and reimburse up to $250,000 of its sale-related expenses.

Competing bids must at least equal the amounts of the stalking horse bid, break-up fee and expense reimbursement, plus $250,000.

Bids at auction must be made in minimum increments of $100,000.

According to court documents, Mercantile has $10 million to $50 million in assets and $50 million to $100 million in debt.

The company's largest unsecured creditors are:

• Mercantile Bancorp Capital Trust IV of Wilmington, Del., with a $27.39 million trust indenture claim;

• Mercantile Bancorp Capital Trust II of Wilmington, Del., with a $22.55 million trust indenture claim;

• Mercantile Bancorp Capital Trust I of Wilmington, Del., with a $13.2 million trust indenture claim; and

• Mercantile Bancorp Capital Trust III of Wilmington, Del., with a $12.76 million trust indenture claim.

R. Dean Phillips and Dennis Prock each own more than 5% of the Mercantile's equity securities.

The company is represented by DLA Piper LLP (US).

Mercantile Bancorp is a Quincy, Ill., bank holding company. The Chapter 11 case number is 13-11634.

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