Old Second extends exchange offer for $31.6 million of 7.8% securities

By Susanna Moon

Chicago, July 30 - Old Second Bancorp, Inc. said it extended the offer to exchange a portion of the $31.6 million outstanding liquidation amount of the 7.8% capital securities issued by Old Second Capital Trust I for newly issued common shares.

The exchange offer will now expire at 11:59 p.m. ET on Aug. 23, pushed back from 11:59 p.m. ET on Aug. 2. The offer began June 22.

As of 5 p.m. ET on July 29, investors had tendered 452,600 shares, which represents a liquidation amount of $4.5 million.

The exchange offer is the first component of a multi-faceted capital strategy designed to strengthen the company's capital position, Old Second previously noted.

The company added that it believes a high level of participation in the exchange offer by holders is important to its previously announced overall capital strategy because the exchange offer represents an opportunity to strengthen the composition of the company's capital base by increasing its tier 1 common and tangible common equity ratios while also reducing the approximately $2.5 million annual interest expense associated with the securities.

The extension of the exchange offer provides holders additional time to properly tender their securities, thereby potentially increasing the level of participation in the exchange offer, Old Second said.

For each $10.00 liquidation amount of securities, Old Second will issue a number of common shares equal to $7.50 divided by the average volume-weighted average price of common shares for the five consecutive trading days ending the second trading day immediately preceding the expiration date of the exchange offer. This represents a 26.1% premium over the last reported sales price of the securities on Nasdaq before the offer began.

The exchange ratio will be set on the second trading day prior to the expiration.

The company also will pay cash for accrued distributions up to the settlement date.

No early tender premium will be paid.

The company will issue no more than 6 million shares of its common stock, in the aggregate, in the exchange offer and in a possible separate private exchange of its common stock for capital securities held by some holders of Old Second Capital Trust II. Tendered capital securities will be prorated as needed to remain within the cap.

If stockholder approval is not obtained prior to the expiration of the exchange offer, the cap will be 2.75 million shares of common stock to comply with Nasdaq listing rules.

D.F. King & Co., Inc. (800 628-8536 or 212 269-5550 for bankers and brokers) is the exchange agent.

Old Second is an Aurora, Ill., bank holding company.

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