SunTrust begins tender offer for up to $1 billion preferreds, hybrids

By Angela McDaniels

Tacoma, Wash., June 1 - SunTrust Banks, Inc. has begun a tender offer for up to $1 billion of some of its preferred and hybrid securities as part of its plan to increase the common equity component of its tier 1 capital by $2.2 billion, according to a company news release.

The securities eligible to participate are:

• SunTrust's $500 million depositary shares, each representing a 1/4,000th interest in a share of series A perpetual preferred stock. Their acceptance priority level is 1;

• SunTrust Preferred Capital I's $500 million 5.853% normal perpetual preferreds. Their acceptance priority level is 1;

• SunTrust Capital VIII's $1 billion 6.1% trust preferreds. Their acceptance priority level is 2;

• SunTrust Capital I's $350 million floating-rate trust preferreds, series A. Their acceptance priority level is 3; and

• SunTrust Capital III's $250 million floating-rate trust preferreds, series A. Their acceptance priority level is 3.

The company is offering $17.50 for each $25.00 depositary share. For each $1,000 liquidation amount of the other securities, SunTrust will pay $700 for each of the 5.853% preferreds and 6.1% trust preferreds and $650 for each of the floating-rate preferreds.

The company is also soliciting from the holders of the 5.853% preferreds consents to some amendments in order to allow the retirement of those securities tendered in the offer.

The consent solicitation will expire at 5 p.m. ET time on June 17, and the tender offer will expire at 11:59 p.m. ET on June 26.

The company said the tender offer is part of the acceleration of its previously announced capital plan framework to increase its tier 1 common equity as indicated by the Federal Reserve's Supervisory Capital Assessment Program.

The plan also includes a public offering of $1.4 billion of common shares, the proceeds of which will be used to fund the tender offer; the completion of about $260 million of the company's previously announced $1.25 billion "at the market" common stock offering, the remainder of which will be terminated; and the sale of selected securities that the company expects may generate about $300 million of tier 1 common equity.

SunTrust's obligation to purchase the securities in the tender offer is subject to a number of conditions including that no change or changes have occurred or are threatened that would materially and adversely affect SunTrust and its subsidiaries or the contemplated benefits of the tender offer to SunTrust, according to the release.

The company's obligation to purchase any of the 5.853% preferreds is conditioned on the receipt of consents from holders of a majority in liquidation amount of the securities.

The tender offer is not conditioned on any minimum amount of securities being tendered.

The dealer managers and solicitation agents are Goldman, Sachs & Co. (877 686-5059 or 212 902-5183), Sandler O'Neill + Partners, LP and SunTrust Robinson Humphrey, Inc.

The information agent is D.F. King & Co. (800 735-3107 or 212 269-5550).

SunTrust is a banking organizations based in Atlanta.

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