Pulaski Financial to buy back all $7.4 million of series A preferreds

By Toni Weeks

San Luis Obispo, Calif., June 26 – Pulaski Financial Corp. plans to fully repurchase or redeem its roughly $7.4 million of fixed-rate perpetual preferred stock, series A.

According to a press release, the company will fund the transaction via a share exchange and private placement offering of common stock, which was completed on Thursday.

The company issued the $1,000 liquidation preference shares in January 2009 to the U.S. Department of the Treasury in conjunction with its Capital Purchase Program. The preferreds were then sold by the Treasury to private investors in a Dutch auction in July 2012.

Subsequently, the company repurchased $25.1 million principal amount of the preferreds at a weighted average discount to par of 2.3%, leaving $7.4 million of the preferreds outstanding.

In the share exchange, the company issued 68,818 common shares in exchange for $735,000 liquidation value of preferred stock in a private transaction. The number of common shares issued was determined based on a price of $10.49 per share, which was the 30-day average closing price of Pulaski common stock, multiplied by 0.95. For insiders, the amount of common stock issued was determined based on a non-discounted price of $11.07 per share, which was equal to the closing price of the common shares immediately preceding the exchange agreement. The company paid for accrued dividends in cash.

“Today’s transactions allowed us to complete the repurchase of our remaining preferred stock, which, effective January 2014, carried a 9% non-deductible dividend,” president and chief executive officer Gary W. Douglass said in the press release.

“By repurchasing the preferred stock with common equity priced well above tangible book value we strengthened three important metrics. We increased tangible book value per share, increased run rate earnings per share and strengthened our tangible common equity level and ratio.”

Pulaski Financial is a savings and loan holding company based in St. Louis.

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