Porter Bancorp, Inc. Expects Stock Exchange Transaction to Increase Stockholders' Equity
December 10 2014 - 8:24AM
Business Wire
Porter Bancorp, Inc. (NASDAQ: PBIB), parent company of
PBI Bank today announced that it expects the exchange of
Series A Preferred stock and other securities, and the planned
conversion to newly issued common and preferred stock to increase
total stockholders’ equity by approximately $7.4 million. The
proposed conversion of the newly issued preferred stock to common
stock is contingent on shareholders’ approval.
“The exchange transaction is expected to increase total
shareholders’ equity by approximately $7.4 million,” stated John T.
Taylor, President and CEO of Porter Bancorp, Inc. “We believe this
transaction will be an important step in strengthening Porter
Bancorp’s capital position and is consistent with our plans to
improve our capital ratios. We also believe our directors’
participation in the exchange of the Series A preferred stock
highlights their confidence in Porter Bancorp’s future.”
As previously reported, the U.S. Treasury completed the sale of
all 35,000 outstanding shares of the Company’s Fixed Rate
Cumulative Perpetual Preferred Stock, Series A, to Company
directors, an affiliate of a Company director and other investors.
The Company subsequently filed an amendment to its Amended and
Restated Articles of Incorporation to authorize and designate the
four new series of preferred shares to effect the transaction. The
transaction is more fully described in the Company’s Form 8-Ks
filed on November 24, 2014 and December 10, 2014.
As part of the transaction, the following securities are being
surrendered to the Company:
- 35,000 shares of Series A Preferred
Stock, book value $35.0 million, stated value $1,000 per share,
including cancellation of approximately $7.4 million of accrued and
unpaid dividends thereon.
- 317,042 shares of Series C Non-Voting
Mandatorily Convertible Preferred Stock, book value of
approximately $3.3 million.
- Warrants to purchase 760,871 non-voting
common shares for $10.95 per share, no book value.
The Company expects to issue the following securities as part of
the transaction:
- 1,821,428 voting common shares
- 40,536 shares of Convertible Perpetual
Preferred Stock, Series B (“Series B Shares”).
- 64,580 shares of Convertible Perpetual
Preferred Stock, Series D (“Series D Shares”).
- 6,198 shares of Non-Voting,
Noncumulative, Non-Convertible Perpetual Preferred Stock, Series E
(“Series E Shares”).
- 4,304 shares of Non-Voting,
Noncumulative, Non-Convertible Perpetual Preferred Stock, Series F
(“Series F Shares”).
The Company expects to complete the Exchange with all of the
buyers no later than December 31, 2014. As part of the transaction,
the Company will seek shareholder approval to convert the Series B
and Series D to common stock at a special meeting to be held during
the first quarter of 2015.
At September 30, 2014, the Company had issued and outstanding
13,099,400 voting common shares, common stockholders’ deficit of
approximately $9.0 million, preferred stockholders’ equity of
approximately $38.3 million, and total stockholders’ equity of
approximately $29.3 million.
The voting common shares issued in the Exchange will increase
the issued and outstanding voting common shares by 1,821,428
shares. Upon shareholder approval, the 40,536 Series B Shares will
convert to 4,053,600 voting common shares, the 64,580 Series D
Shares will convert to 6,458,000 non-voting common shares, and
total voting and non-voting common shares will total approximately
25.4 million shares.
The Series E and Series F Shares are not convertible into common
stock, have a liquidation preference of $1,000 per share or
approximately $10.5 million in the aggregate, and bear a
noncumulative dividend rate of 2% if and when declared.
The Exchange is expected to increase total common and preferred
stockholders’ equity by approximately $7.4 million.
The Series E and F Shares will be recorded at fair value on the
date of issuance in accordance with U.S. GAAP. Assuming the fair
value of the Series E and F Shares to be equal to the aggregate
$10.5 million liquidation preference of those shares, then upon
shareholder approval the Exchange would improve common
stockholders’ deficit from approximately $9.0 million as reported
at September 30, 2014 to common stockholders’ equity of
approximately $26.2 million and would decrease preferred
stockholders’ equity from approximately $38.3 million as reported
at September 30, 2014 to approximately $10.5 million. This results
in a pro forma tangible book value of $0.99 per common share as of
September 30, 2014. The fair value of the Series E and F Shares
will be determined by an independent third party expert and could
be less than the liquidation preference.
About Porter Bancorp, Inc.
Porter Bancorp, Inc., a bank holding company headquartered in
Louisville, Kentucky, had $1.0 billion in assets as of
September 30, 2014. Through Porter’s subsidiary PBI Bank, it
operates banking offices in Kentucky. Porter Bancorp’s common stock
is traded on the Nasdaq Capital Market under the symbol “PBIB.”
PBIB-G
Forward-Looking Statements
Statements in this press release relating to Porter Bancorp’s
plans, objectives, expectations or future performance are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The words “believe,”
“may,” “should,” “anticipate,” “estimate,” “expect,” “intend,”
“objective,” “possible,” “seek,” “plan,” “strive” or similar words,
or negatives of these words, identify forward-looking statements.
These forward-looking statements are based on management’s current
expectations. Porter Bancorp’s actual results in future periods may
differ materially from those indicated by forward-looking
statements due to various risks and uncertainties, including our
ability to reduce our level of higher risk loans such as commercial
real estate and real estate development loans, reduce our level of
non-performing loans and other real estate owned, and increase net
interest income in a low interest rate environment, as well as our
need to increase capital. These and other risks and uncertainties
are described in greater detail under “Risk Factors” in the
Company’s Form 10-K and subsequent periodic reports filed with the
Securities and Exchange Commission. The forward-looking statements
in this press release are made as of the date of the release and
Porter Bancorp does not assume any responsibility to update these
statements.
Porter Bancorp, Inc.John T. Taylor, 502-499-4800President
Porter Bancorp, Inc. (delisted) (NASDAQ:PBIB)
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