Popular holders tender $934.11 million of preferreds, trust preferreds in exchange offer

By Jennifer Chiou

New York, Aug. 21 - Popular, Inc. announced the wrap of its offer to issue up to 390 million shares of common stock in exchange for its series A preferred stock, series B preferred stock and trust preferred securities.

The company said that the tendered securities amounted to $934,112,900. As a result, it will issue a total of 357,510,076 common shares.

The offer expired at 11:59 p.m. ET on Aug. 20. It was previously extended to Aug. 13 from July 28.

"This exchange offer was a difficult decision but necessary given the current state of the economy in the United States and Puerto Rico," chairman and chief executive officer Richard L. Carrion said in a news release.

"The corporation is now well positioned in the event a worse-than-expected business environment materializes in the future."

The relevant price in the offer was $2.50 per common share. The closing price for the company's stock on Aug. 18 was $1.76 (Nasdaq: BPOPN) per share.

For each $1,000 preference amount, the company was offering $1,150 of common stock as well as 460 common shares 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.

For each $25.00 liquidation preference, the company was offering $30.00 of common stock and 12 common shares 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.

Popular was originally offering $800 of common stock for the 8.327% and 6.564% trust preferreds and $25.00 of common stock for the 6.7% and 6.125% trust preferreds.

For each $25.00 liquidation preference of Popular's 6.375% non-cumulative monthly income preferreds, 2003 series A, and 8.25% non-cumulative monthly income preferreds, series B, the payment remained $20.00 of common stock and eight common shares.

Specifically, the company accepted tenders for:

• $164,731,850 of the 6.375% non-cumulative preferreds, resulting in the issue of 52,714,192 common shares;

• $371,983,375 of the 8.25% non-cumulative preferreds, resulting in the issue of 119,034,680 common shares;

• $91,135,000 of the 8.327% trust preferreds, resulting in the issue of 41,922,100 common shares;

• $158,349,000 of the 6.564% trust preferreds, resulting in the issue of 72,840,540 common shares;

• $118,936,750 of the 6.7% trust preferreds, for the issue of 57,089,640 common shares; and

• $28,976,925 of the 6.125% trust preferreds, for the issue of 13,908,924 common shares.

Settlement is slated for Aug. 25.

When Popular announced plans for the offer on June 8, it planned to offer $22.50 for each of the 6.7% trust preferreds and 6.125% trust preferreds and $750 for each of the 8.327% trust preferreds and 6.564% trust preferreds.

As already noted, the number of shares exchanged for each security was equal to the dollar amount divided by the greater of (a) the average volume-weighted average price of Popular's stock during the five trading days ending on the second business day immediately preceding the expiration date of the exchange offer and (b) $2.50 per share.

As of Aug. 6, $661,155,375 liquidation amount or liquidation preference, or 47%, of the securities had been tendered in the exchange offer, which began June 29.

Consent solicitation

The company was also 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.

Holders who tendered their series A or series B preferreds had to grant consents.

If consents had not been obtained, the company would have sought the agreement of the 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.

In either case, the Treasury will continue to receive distributions on its Popular securities.

As previously reported, Popular planned to suspend dividends on its common stock and on its series A and B preferreds after paying the previously declared preferred dividends on June 30.

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

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 exchange offer.

The company 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," Carrion said in a previous news release.

UBS Investment Bank (888 719-4210) and Popular Securities (787 766-6601) were the lead dealer managers, and the co-lead dealer manager was Citigroup Global Markets Inc. (800 558-3745).

Global Bondholder Services Corp. (866 540-1500 or 212 430-3774) was the information agent.

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.