Midwest Banc Holdings receives default, notes acceleration notices

By Caroline Salls

Pittsburgh, Aug. 6 - Midwest Banc Holdings, Inc. is in default on its $10 million of junior subordinated debt securities due 2033 and the related trust preferred securities of unconsolidated subsidiary MBHI Capital Trust IV as a result of the receivership of the company's wholly owned subsidiary Midwest Bank and the assumption of its banking operation, according to an 8-K filed with the Securities and Exchange Commission.

As previously reported, the Federal Deposit Insurance Corp. has been named as Midwest Bank's receiver.

The holding company said it does not believe that the receivership and assumption of operations constitute events of default.

According to the 8-K, the indenture trustee has informed Midwest Banc Holdings that it will not take further action on the default unless the holders of the debt securities direct it to do so.

In addition, the company said it received an acceleration notice on notes issued to unconsolidated subsidiary MBHI Capital III.

Although the acceleration notice cites events of default occurring on July 14, 2009 and May 14, the company said it does not specify what events triggered those defaults.

Midwest Banc Holdings said it does not believe that events of default have occurred on the notes.

Melrose Park, Ill.-based Midwest Banc is the holding company for Midwest Bank and Trust.

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