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Santander Holdings trustee says trust preferred holders owed interest
By Angela McDaniels
Tacoma, Wash., Dec. 23 - Santander Holdings USA, Inc. said the trustee for its trust preferred income equity redeemable securities filed suit against the company, insisting that a change of control has occurred and that the trust preferred holders are owed money.
The trustee, Bank of New York Mellon Trust Co., NA, believes the acquisition of Santander Holdings by Banco Santander, SA on Jan. 31, 2009 constituted a change of control.
Santander Holdings said that if the acquisition constituted a change of control, it would be required to pay a significantly higher rate of interest on subordinated debentures held in trust for the holders of the trust preferreds.
On Dec. 17, the trustee filed a complaint in the District Court for the Southern District of New York seeking damages equal to the additional interest that would have been paid for the benefit of the holders.
If the trustee prevails, the potential impact on Santander Holdings would be a reduction of pre-tax income up to $313 million, of which $272 million relates to the difference in the current carrying amount of the subordinated debentures and the principal amount due at maturity.
Santander Holdings believes the acquisition was not a change of control and intends to "vigorously defend its position" against any claims by the trustee or any holder of the trust preferreds.
The company said there is no change in control under the trust preferreds if the consideration in the acquisition consisted of shares of common stock traded on a national securities exchange.
Banco Santander issued American Depositary Receipts in the acquisition, according to the SEC filing. The ADRs are listed on the New York Stock Exchange.
Boston-based Santander Holdings is the parent company of Sovereign Bank. Banco Santander is a commercial and private bank based in Madrid.
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