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Popular to repay $935 million trust securities tied to TARP preferreds
By Marisa Wong
Madison, Wis., June 19 – Popular, Inc. intends to repay $935 million of Troubled Asset Relief Program Capital Purchase Program funds, according to an 8-K filing with the Securities and Exchange Commission.
Popular will redeem its junior subordinated debentures held by Popular Capital Trust III, which will in turn redeem the $935 million of trust capital securities held by the U.S. Treasury.
The trust capital securities were issued to the U.S. Treasury in August 2009 in exchange for 935,000 shares of Popular’s series C preferred stock initially issued in December 2008 under the TARP Capital Purchase Program.
Popular plans to fund the repayment with a combination of internal liquidity and an issuance of $400 million of debt securities, subject to market conditions. The company does not intend to issue any equity in connection with the redemption.
After the redemption, the company will also repurchase the outstanding warrant initially issued to the U.S. Treasury under the TARP Capital Purchase Program in 2008. The warrant represents the right to purchase 2,093,284 shares of Popular’s common stock at an exercise price of $67 per share with an original term of 10 years.
Upon redemption of the junior subordinated debentures, Popular expects to record a non-cash charge to earnings for the unamortized portion of the discount associated with the debentures, which at March 31 had a balance of $414.3 million.
Popular is a financial services provider based in San Juan, Puerto Rico.
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