Zions completes tender offer for preferreds, exchange offer for notes

By Angela McDaniels

Tacoma, Wash., June 29 - Zions Bancorp. received tenders for 4,020,435 depositary shares in the modified Dutch auction tender offer for its series A floating-rate non-cumulative perpetual preferred stock, according to an 8-K filing with the Securities and Exchange Commission.

Each depositary share represents a 1/40th ownership interest in the preferreds.

The company said it plans to purchase all the tendered shares for $11.50 each.

Zions also received and accepted tenders for $230,135,000 principal amount, or 16.44%, of its three outstanding series of subordinated notes in an exchange offer.

As previously reported, the tender offer and exchange offer are two of three actions being taken to modify and enhance the company's capital. The third component is an equity distribution agreement with Goldman, Sachs & Co. under which the company may offer and sell through or to Goldman Sachs, from time to time, up to $250 million of its common stock.

In the tender offer, holders were invited to submit bids of $10.00 to $11.50 per depositary share. Each depositary share represents $25.00 liquidation preference of preferreds.

In the exchange offer, noteholders were offered $1,000 principal amount of a corresponding newly issued series of subordinated notes for each $1,000 principal amount of notes exchanged.

Following the completion of the exchange offer, Zions will modify the terms of the notes not exchanged in the offer to allow those notes to be converted into 40 depositary shares each representing a 1/40th ownership interest in a share of either, at the option of the holder, the company's series A preferreds or its 9.5% series C non-cumulative perpetual preferreds.

Each newly issued series of subordinated notes will be identical to the corresponding series of outstanding subordinated notes except for this new conversion feature.

Both offers expired on June 26.

The company has sold $116.6 million of shares to Goldman Sachs under the equity distribution agreement so far and will use the proceeds to fund the tender offer.

Goldman Sachs (800 828-3182 or 212 357-4692) was the dealer manager for the tender offer. D.F. King & Co., Inc. (800 901-0068 or 212 269-5550) was the information agent.

J.P. Morgan Securities Inc. was the company's financial adviser in connection with the exchange offer, and Global Bondholder Services Corp. (866 857-2200 or 212 430-3774) was the information agent.

Zions is a bank based in Salt Lake City.

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