Flagstar gets Fed go-ahead to redeem $267 million of TARP preferreds

By Susanna Moon

Chicago, June 27 – Flagstar Bancorp Inc. said it obtained regulatory approval to redeem $267 million of its series C fixed-rate cumulative preferred stock.

Flagstar received “written non-objection’ from the Federal Reserve Bank of Chicago, under the authority delegated by the board of governors of the Federal Reserve System, according to the company notice.

As reported March 15, 2013, Flagstar issued the preferreds to the government agency under the Troubled Asset Relief Program.

Before redeeming the TARP preferreds, which requires the company to pay about $102 million of accrued dividends, Flagstar will pay about $31 million of deferred interest on nine series of trust preferred securities issued by trusts controlled by the company, the release noted.

The Troy, Mich.-based company said it plans to finance the redemption using proceeds of senior debt securities and from internally generated sources, including a $200 million dividend from its subsidiary Flagstar Bank, FSB.

Flagstar sold 266,657 of the $1,000-par preferreds at $911.50 each for proceeds of $243.06 million. The financial institution did not receive any of the funds.

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