Doral Financial shareholders approve planned recapitalization

By Lisa Kerner

Charlotte, N.C., July 17 - Doral Financial Corp. said 95% of its shareholders voting at its special meeting on Tuesday approved the company's proposed $610 million recapitalization transaction with Doral Holdings Delaware, LLC.

The transaction is expected to close on July 19, prior to the maturity of Doral's $625 million floating-rate senior notes on July 20.

On May 17, Doral announced a definitive stock purchase agreement providing for the sale of $610 million of Doral common stock for $0.63 per share to Doral Holdings, a newly formed entity. The agreement was expected to help the company repay its floating-rate notes at maturity, according to a company news release.

Doral also has final court approval of the agreement to settle all claims in the consolidated securities class action and shareholder derivative litigation. The litigation stemmed from Doral's announcement in April 2005 that it needed to restate previously issued financial statements.

"When I first addressed shareholders last October, as the new management team began at Doral, I reported that there were key issues before the company that needed to be successfully addressed for Doral to move forward," chief executive officer and president Glen R. Wakeman said in a company news release.

The issues included recapitalizing Doral Financial, resolving the shareholder litigation and making the company current on its financial reporting.

"I am pleased to say that we have addressed or are addressing successfully all of these issues," Wakeman added.

Doral Holdings was formed by investors Bear Stearns Merchant Bank, Marathon Asset Management, Perry Capital, the D.E. Shaw group, Tennenbaum Capital Partners, Eton Park Capital Management, Goldman Sachs & Co., Canyon Capital Advisors and GE Asset Management.

Doral is a San Juan, Puerto Rico, financial services company.

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