Doral: Rejected Offer Was Viable Alternative For First BanCorp
December 07 2010 - 5:42PM
Dow Jones News
Doral Financial Corp. (DRL) said in a securities filing Tuesday
that its rejected offer for First BanCorp (FBP) of Puerto Rico was
the "most viable alternative" to First BanCorp's own efforts to
raise capital.
On Monday First BanCorp said it had received and rejected from
Doral an offer of 30 cents a share in an all-stock deal. First
BanCorp said the offer wasn't in the best interest of the company
and its shareholders.
The filing by Doral on Tuesday was only about the offer First
BanCorp had rejected. It didn't include Doral's response to First
BanCorp's rejection.
In its filing, quoting a Dec. 2 letter, Doral said it had been
following "with great interest" First BanCorp's attempts to raise
capital.
"We believe that our proposal presents the most viable
alternative for First BanCorp and its shareholders," the letter
read. "We believe we can combine our companies on a basis that
would be financially attractive to both sets of shareholders and
would not require external assistance."
First BanCorp has been trying to raise capital since the spring,
when it originally planned to buy one of its collapsing competitors
in a government-assisted auction that remapped the Puerto Rican
banking world. But it didn't raise capital in time and investors
have fretted over bad construction loans.
Last week, the U.S. Treasury Department said it would convert
its preferred stock in the bank into common stock if First BanCorp
raised only $350 million instead of the $500 million it originally
sought to raise. Moreover, the Treasury Dept. will give First
BanCorp more advantageous conversion terms on its preferred
stock.
Doral made the offer to enter into merger discussions the same
day First BanCorp announced the renegotiated terms.
The letter said the combined bank would be the second-largest
bank in Puerto Rico by deposits, and "extremely beneficial for the
health of the larger Puerto Rican banking market."
The Doral presentation said the combined banks would have 20% of
Puerto Rico's deposits and 35% of its loans in dollars, both
numbers second only to Popular Inc. (BPOP).
It concluded to say that Doral has hired Credit Suisse Group AG
(CS, CSGN.VX) and FBR Capital Markets Corp. (FBCM) as financial
advisers.
Doral also attempted to buy another Puerto Rican bank earlier
this year but was left out, and then turned its sights on First
BanCorp.
First BanCorp shares closed at 30 cents for the second straight
day Tuesday, after jumping to the offer price earlier Monday.
-By David Benoit, Dow Jones Newswires; 212-416-2458;
david.benoit@dowjones.com
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