Recapitalization includes conversion of preferreds to common stock
By Devika Patel
Knoxville, Tenn., Feb. 26 - First Security Group, Inc. said it plans a private placement of common stock as part of a roughly $90 million recapitalization. The four lead investors will each invest about $9 million.
The deal, which was negotiated on Monday, includes a $5 million follow-on rights offering that would allow existing shareholders to purchase shares at the same price as the recapitalization, which is priced at $1.50 per share.
The price per share is a 49.5% discount to the Feb. 22 closing share price of $2.97.
The recapitalization also includes a conversion of the company's TARP CPP preferred stock to common stock and the sale of under- and non-performing loans.
Proceeds will be used by subsidiary FSGBank, NA to support future balance sheet growth and to fund losses associated with the recently completed loan sale.
First Security is a Chattanooga, Tenn., bank holding company for FSGBank, NA.
| Issuer: | First Security Group, Inc.
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| Issue: | Common stock
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| Amount: | $90 million (approximate)
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| Price: | $1.50
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| Warrants: | No
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| Settlement date: | Feb. 25
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| Stock symbol: | Nasdaq: FSGI
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| Stock price: | $2.97 at close Feb. 22
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| Market capitalization: | $3.27 million
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