By Lisa Kerner
Charlotte, N.C., Oct. 16 - Valley Financial Corp. issued an $11 million 10-year variable-rate subordinated note to an accredited investor on Tuesday, according to an 8-K filing with the Securities and Exchange Commission.
Proceeds of about $10.9 million were used to redeem the remaining $9.62 million of Valley Financial's TARP preferred stock and for general corporate purposes, which may include the repurchase of the TARP warrant from the Department of the Treasury.
The note bears interest, payable monthly, at a variable rate of Libor plus 500 basis points per year, with a floor of 5.5% and a cap of 9.5%.
Valley Financial has a one-time rate conversion option to fix the interest rate, provided that the fixed rate can never be less than 7.5%.
Monthly principal payments are $10,000 per month through October 2018 and $173,333.33 per month from November 2018 through October 2023, the filing stated.
The company may, subject to regulatory approval, prepay the note, in part or in full, beginning on Oct. 15, 2014 if the rate conversion option has not been exercised. Or, if the rate conversion option has been exercised, Valley Financial may prepay the note after the first anniversary of the date of such conversion.
Valley Financial agreed it will not prepay its trust preferred securities without the written permission of the noteholder.
Roanoke, Va.-based Valley Financial is the holding company for Valley Bank.
| Issuer: | Valley Financial Corp.
|
| Issue: | Subordinated note
|
| Amount: | $11 million
|
| Coupon: | Libor plus 500 bps, subject to 5.5% floor and 9.5% cap
|
| Maturity: | Oct. 15, 2023
|
| Settlement date: | Oct. 15
|
| Distribution: | Private placement
|
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