By Angela McDaniels
Tacoma, Wash. Dec. 10 - Valley National Bancorp filed an S-3 registration with the Securities and Exchange Commission that will allow the U.S. Treasury to resell the $300 million series A fixed-rate cumulative perpetual preferred stock it purchased from the bank.
The company issued the preferreds on Nov. 14 under the Capital Purchase Program of the Treasury's Trouble Asset Relief Program.
The non-voting preferreds pay dividends at 5% per year for five years and then at 9% per year.
The preferreds are callable at par after three years. Valley can call them earlier if it funds the repurchase with proceeds from an equity offering and if it calls at least 25% of the preferreds.
As long as the Treasury continues to own any of the preferreds, Valley cannot pay dividends on its common stock or other preferreds unless all dividends on the series A preferreds have been paid in full, and Valley cannot repurchase preferreds from any other holder unless it offers to purchase the same amount from the Treasury.
Valley cannot increase the cash dividend on its common stock or repurchase any common stock without the consent of the Treasury until the earlier of Nov. 14, 2011, the Treasury transfers the preferreds or the preferreds are redeemed.
In addition to the preferreds issued to the Treasury, the company has retained 29.7 million blank check preferreds.
Warrant
The shelf filing also covers a warrant for the purchase of 2,297,090 shares of common stock with an initial per-share exercise price of $19.59 for a total of $45 million. The warrant was immediately exercisable and expires on Nov. 14, 2018.
Valley said that without the consent of the company and the warrantholder, the warrant may only be exercised on a net basis, meaning the holder does not pay the exercise price but instead authorizes Valley to reduce the shares receivable for the warrant by the number of shares with a then-current market value equal to the exercise price.
If Valley raises at least $300 million of equity capital by Dec. 31, 2009 and the Treasury is still the holder of the warrant, then the number of shares of Valley common stock underlying the warrant will be reduced by half.
The company said the Treasury may offer the preferreds or the warrant from time to time in one or more public or private transactions. Valley National will not receive any proceeds from any sale.
Valley National is a Wayne, N.J.-based regional bank holding company.
| Issuer: | Valley National Bancorp
|
| Issue: | Series A fixed-rate cumulative perpetual preferred stock
|
| Amount: | $300 million
|
| Dividends: | 5% for five years, then 9%; payable quarterly
|
| Price: | $1,000
|
| Call option: | At par after three years
|
| Warrant: | For 2,297,090 shares of common stock
|
| Warrant exercise price: | $19.59
|
| Investor: | U.S. Treasury
|
| Settlement date: | Nov. 14
|
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