First BanCorp prices exchange offer for $63.05 million preferreds

By Susanna Moon

Chicago, March 22 - First BanCorp said it priced the offering for up to 10,087,488 newly issued shares of its common stock in exchange for $63,046,800 liquidation preference of noncumulative perpetual monthly income preferred stock.

The relevant price was set at $6.16, the exchange value at $20 and the exchange ratios for the preferreds with a liquidation preference of $25 per share as follows:

• 3.2471 for the $11,254,875 liquidation preference of 7.125% series A preferreds;

• 3.2471 for the $11,899,675 liquidation preference of 8.35% series B preferreds;

• 3.2471 for the $11,515,275 liquidation preference of 7.25% series C preferreds;

• 3.2471 for the $12,764,800 liquidation preference of 7.25% series D preferreds; and

• 3.2471 for the $15,612,175 liquidation preference of 7% series E preferreds.

For each preferred, the company will issue a number of common shares equal to the exchange ratio, which is the exchange value divided by the relevant price of $6.16 according to a company press release.

The company's stock (NYSE: FBP) closed at $6.19 on March 21, which is greater than the relevant price. Depending on the trading price of the stock on the settlement date of March 28, the market value of the stock that the company issues in exchange for the tendered preferreds may be less than, equal to or greater than the exchange value, the release noted.

The offer will end at midnight ET on March 25. The deadline was pushed out from 5 p.m. ET on March 18.

As of the original March 18 expiration date, 68,076 shares of series A preferred stock, 30,887 shares of series B preferred stock, 45,275 shares of series C preferred stock, 42,543 shares of series D preferred stock and 116,947 shares of series E preferred stock have been validly tendered and not withdrawn.

Due to the extension of the expiration date, the relevant price and exchange ratios for the exchange offer were recalculated.

As noted before, the company will issue a number of shares of common stock in exchange for each preferred accepted based on an exchange value of $20 per preferred divided by the higher of (1) the average volume-weighted average price of the common stock during the five trading days ending on the second business day immediately preceding the March 25 expiration date and (2) $5 per common share. No more than four common shares will be issued in exchange for each preferred.

The price per share for the purposes of determining the number of shares to be issued per preferred exchanged was set at 4 p.m. ET on the second business day immediately preceding the expiration date.

More details

As noted before, to participate in the exchange offer, holders must grant a proxy permitting the proxyholders to execute a written consent in favor of an amendment that would delete the section of the preferreds' certificate of designation that allows the holders to appoint two additional members to the board of directors when the company has not paid dividends in full on the preferreds for 18 monthly dividend periods (whether consecutive or not). The holders currently have this right given that the company has not paid dividends since August 2009.

Holders of preferreds that are not tendered in the exchange offer will receive a fee of $0.25 per preferred for their proxies in favor of the amendment if the amendment is approved. No such fee will be paid for tendered preferreds, according to a schedule 14A filing with the Securities and Exchange Commission.

The exchange offer is conditioned on the holders of at least two-thirds of each series of preferreds and the holders of at least a majority of the common stock giving their consent to the preferred stock amendment.

The dealer manager is Sandler O'Neill + Partners, LP (866 805-4128 or 212 466-7807). Computershare is acting as exchange agent, and Georgeson Inc. (866 856-6388 or 212 440-9800) is acting as information agent.

First BanCorp is based in San Juan, Puerto Rico. It is the parent corporation of FirstBank Puerto Rico, a state-chartered commercial bank.

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