Vineyard National trust preferred holders won't recover investment under bank sale; bankruptcy one sale option

By Caroline Salls

Pittsburgh, Nov. 17 - Vineyard National Bancorp said it is unlikely that its unsecured creditors, including holders of its trust preferred securities, will recover their investment in connection with the proposed $18 million sale of the wholly owned subsidiary Vineyard Bank, NA's stock to newly formed corporation Vineyard Bancshares, Inc., according to a 10-Q filed with the Securities and Exchange Commission.

Vineyard said the sale transaction is structured as a sale of the bank's stock, and the sale will be completed either through a direct sale of the bank shares, subject to shareholders' approval, through foreclosure by the company's senior lender and subsequent transfer of the bank shares, or through a sale of the bank shares in bankruptcy.

According to the 10-Q, Vineyard Bancshares is controlled by the company's chairman of the board, Douglas M. Kratz.

The closing of the transaction is subject to the buyer receiving subscriptions for at least $125 million from a private placement stock offering.

Vineyard National is the holding company for Vineyard Bank and is located in Corona, Calif.

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