Popular plans to hold exchange offer for preferreds, trust preferreds

By Angela McDaniels

Tacoma, Wash., June 8 - Popular, Inc. said it plans to offer up to 390 million shares of common stock in exchange for its series A preferred stock, series B preferred stock and trust preferred securities.

For each $25.00 liquidation preference, the company plans to offer $20.00 of common stock for its 6.375% non-cumulative monthly income preferreds, 2003 series A, and 8.25% non-cumulative monthly income preferreds, series B, and $22.50 of common stock for the 6.7% cumulative monthly income trust preferreds issued by Popular Capital Trust I and the 6.125% cumulative monthly income trust preferreds issued by Popular Capital Trust II.

For each $1,000 preference amount, the company plans to offer $750 of common stock for the 8.327% trust preferreds issued by BanPonce Trust I and the 6.564% trust preferreds issued by Popular North America Capital Trust I.

If the offer is fully subscribed, Popular's tier 1 common equity would increase by about $1.2 billion.

Popular is not one of the banking institutions included in the Supervisory Capital Assistance Program, but it is seeking to increase its tier 1 common/risk-weighted assets ratio in response to the federal banking regulators' "focus on banks putting themselves in a better position in the event of a more adverse economic and credit scenario," chairman and chief executive officer Richard L. Carrion said in the release.

Popular also announced that it will suspend dividends on shares of its common stock and on its series A and B preferreds after paying the previously declared preferred dividends on June 30.

The company expects to continue to make distributions on its trust preferreds.

Consent solicitation

In connection with the proposed exchange offer, the company is seeking the consent of holders of its series A and B preferreds to issue shares of senior preferreds to the U.S. Treasury in exchange for the series C preferreds currently held by the Treasury under the Troubled Asset Relief Program.

If those consents are not obtained, the company will seek the agreement of the U.S. Treasury to exchange its series C preferreds for newly issued trust preferreds having a distribution rate equal to the dividend rate on the series C preferreds.

If either action occurs, the U.S. Treasury will continue to receive distributions on its Popular securities.

Popular noted that the U.S. government is not making any new investment in the company or receiving any common stock in connection with the proposed exchange offer.

Current holders of Popular common stock will continue to own at least 42% of the company's common stock after the proposed exchange offer, assuming maximum acceptance.

The lead dealer managers for the proposed exchange offer are UBS Investment Bank and Popular Securities, and the co-lead dealer manager is Citigroup Global Markets Inc.

Popular is a financial services provider based in San Juan, Puerto Rico.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.