Affiliates of Castle Creek Capital to Lead
Investment Round at a Purchase Price of $2.25 Per Share of Common
Stock Equivalent Securities
Company to Benefit From Director or Board
Observer Identified by Affiliates of Castle Creek, a Leading
Community Bank Investor
Republic First Bancorp, Inc. (NASDAQ: FRBK) (the “Company” or
“Republic First”), the holding company for Republic First Bank
d/b/a Republic Bank, today announced it has entered into a
definitive agreement with certain accredited investors for a
private placement of equity securities of the Company (the “Capital
Raise”) in the aggregate amount of $125 million at a purchase price
of $2.25 per share of Common Stock equivalent securities. The
Capital Raise, which follows a strategic review process overseen by
the Strategic Review Committee of Republic First’s Board of
Directors (the “Board”), with the assistance of independent
advisors, is intended to support the Company’s execution of a
strategic plan to drive profitability and enhance shareholder
value.
Affiliates of Castle Creek Capital (together with its affiliates
and co-investors, “Castle Creek”), an alternative asset management
firm that has more than three decades of experience constructively
partnering with community banks, has committed to participate in
the Capital Raise for an aggregate amount of $60.725 million. The
firm has made more than 300 community bank investments, totaling
$1.7 billion across eight private equity funds. As part of the
Capital Raise, Castle Creek will have the right following the
closing to appoint a director or an observer to the Board and any
subsidiary bank Board of Directors. Additionally, an affiliate of
Cohen Private Ventures, LLC (“Cohen Private Ventures”) has
committed to participate in the Capital Raise on the same terms for
an aggregate amount of $30 million.
Thomas Geisel, President and Chief Executive Officer of Republic
First, commented:
“This Capital Raise, which is a testament to the strength and
potential of Republic First’s brand and business, positions us to
accelerate execution of a strategic plan that targets profitability
and enhanced value for stakeholders. We appreciate the confidence
that Castle Creek has shown in our reconstituted leadership team
and new vision. Partnering with an experienced bank investor allows
us to not only improve our balance sheet, but also draw on Castle
Creek’s extensive community banking acumen and success. We are also
fortunate that Cohen Private Ventures, which is a meaningful
current investor, believes in our vison and opportunity by
committing to significantly add to its investment.
Although we have significant work in front of us, completing our
strategic review and strengthening Republic First’s financial
position are important milestones on the path to long-term value
creation.”
The consummation of the Capital Raise is conditioned on other
accredited investors committing to purchase an additional $34.275
million on the same terms. Additional investors will come from a
pool identified by the Company and its advisors. The Capital Raise
was negotiated and recommended by the Strategic Review Committee of
the Board following its review and evaluation of multiple inquiries
from third parties regarding potential transactions and alternative
strategies. The participation of Cohen Private Ventures was
negotiated at arm’s length.
Tony Scavuzzo, Managing Principal of Castle Creek, added:
“We look forward to supporting Tom, the team, and the Board of
Directors. Our unique operating experience plus decades of
investing in community banks prepares us well to help drive value
creation going forward.”
Structure
The Capital Raise includes (i) Common Stock of the Company, par
value $0.01 per share (“Common Stock”), (ii) Series B Convertible
Preferred Stock, par value $0.01 (“Series B Preferred Stock”),
authorized by the Board through the Company’s existing blank check
preferred provision, which will have no voting rights and be
economically equivalent to 10 shares of Common Stock and which,
upon the authorization of the Non-Voting Common Stock, will
automatically convert into 10 shares of Non-Voting Common Stock for
each share of Series B Preferred Stock, (iii) Non-Voting common
stock of the Company, par value $0.01 (“Non-Voting Common Stock”),
to be authorized and issued post-closing upon receipt of
shareholder approval and which may be converted into Common Stock
at the option of the holder if, following such conversion, the
holder will own no more than 9.9% of the outstanding shares of
Common Stock, or in connection with specified permitted transfers,
and (iv) Warrants issued to Castle Creek to purchase Series B
Preferred Stock/Non-Voting Common Stock as further described below
(“Warrants” and together with the Common Stock, Series B Preferred
Stock and Non-Voting Common Stock, the “Securities”).
At closing, in exchange for the cash consideration of $2.25 per
share of Common Stock equivalent securities on an as-converted
basis, the Company will issue to each purchaser a mix of voting
Common Stock and Series B Preferred Stock agreed by the Company and
the purchaser. In consideration of Castle Creek’s role as the
anchor investor, the Company will also issue to Castle Creek a
Warrant for 1,300,000 shares of Non-Voting Common Stock (or
equivalent Series B Preferred Stock) with a strike price of $2.25
per share of Non-Voting Common Stock. The Warrant has a seven-year
term and is subject to anti-dilution adjustments for non-cash
dividends, non-cash distributions, stock splits, subdivisions,
reclassifications or combinations of Common Stock. The Capital
Raise is expected to close in May 2023.
Additional information about the Capital Raise, including a copy
of the definitive agreement, will be provided in a Current Report
on Form 8-K to be filed by the Company with the U.S. Securities and
Exchange Commission (the “SEC”) and will be available at
www.sec.gov.
Advisors
Keefe, Bruyette & Woods, A Stifel Company is serving as
exclusive placement agent and Vinson & Elkins L.L.P. and Luse
Gorman PC are serving as legal advisors to the Company. Squire
Patton Boggs (US) LLP is serving as legal advisor to the placement
agent. Sidley Austin LLP is serving as legal advisor to Castle
Creek.
About Republic Bank
Republic First Bancorp, Inc. is the holding company for Republic
First Bank, which does business under the name Republic Bank.
Republic Bank is a full-service, state-chartered commercial bank,
whose deposits are insured up to the applicable limits by the
Federal Deposit Insurance Corporation (FDIC). The Bank provides
diversified financial products through its thirty-four stores
located in Greater Philadelphia, Southern New Jersey, and New York
City. Republic Bank stores have extended lobby and drive-thru hours
providing customers with some of the most convenient hours compared
to any bank in its market. The Bank offers free checking, coin
counting, ATM/debit cards issued on the spot and access to more
than 55,000 surcharge free ATMs worldwide via the Allpoint Network.
The Bank also offers a wide range of residential mortgage products
through its mortgage division, which does business under the name
of Oak Mortgage Company.
About Castle Creek
Capital
Castle Creek is an alternative asset management firm focused on
the community banking industry. Located in San Diego, California
and Dallas, Texas, the firm has been a leading investor in
community banking since its inception in 1990, having raised and
managed eight private equity funds and multiple special situations
funds.
Forward Looking
Statements
The Company may from time to time make written or oral
“forward-looking statements”, including statements contained in
this release and in the Company’s filings with the SEC. These
forward-looking statements include statements with respect to the
Company’s beliefs, plans, objectives, goals, expectations,
anticipations, estimates, and intentions that are subject to
significant risks and uncertainties and are subject to change based
on various factors, many of which are beyond the Company’s control.
These factors include competition, timing, credit risks of lending
activities, changes in general economic conditions, price pressures
on loan and deposit products, the failure to consummate the Capital
Raise, and other factors detailed from time to time in the
Company’s filings with the SEC. The words “may”, “could”, “should”,
“would”, “believe”, “anticipate”, “estimate”, “expect”, “intend”,
“plan”, and similar expressions are intended to identify
forward-looking statements. All such statements are made in good
faith by the Company pursuant to the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995. The Company
does not undertake to update any forward-looking statement, whether
written or oral, that may be made from time to time by or on behalf
of the Company, except as may be required by applicable law or
regulations.
Important Additional
Information
The Company intends to file a definitive proxy statement and may
file a WHITE proxy card with the SEC in connection with the
Company’s 2022 annual meeting of shareholders (the “2022 Annual
Meeting”) and, in connection therewith, the Company, certain of its
directors and executive officers will be participants in the
solicitation of proxies from the Company’s shareholders in
connection with such meeting. SHAREHOLDERS OF THE COMPANY ARE
STRONGLY ENCOURAGED TO READ SUCH PROXY STATEMENT, ACCOMPANYING
WHITE PROXY CARD AND ALL OTHER DOCUMENTS FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE 2022 ANNUAL MEETING.
The Company’s definitive proxy statement for the 2021 annual
meeting of shareholders contains information regarding the direct
and indirect interests, by security holdings or otherwise, of the
Company’s directors and executive officers in the Company’s
securities. Information regarding subsequent changes to their
holdings of the Company’s securities can be found in the SEC
filings on Forms 3, 4, and 5, which are available on the Company’s
website at http://investors.myrepublicbank.com/ or through the
SEC’s website at www.sec.gov. Information can also be found in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2021 on file with the SEC. Updated information regarding the
identity of potential participants, and their direct or indirect
interests, by security holdings or otherwise, will be set forth in
the definitive proxy statement and other materials to be filed with
the SEC in connection with the 2022 Annual Meeting. Shareholders
will be able to obtain the definitive proxy statement, any
amendments or supplements to the proxy statement and other
documents filed by the Company with the SEC at no charge at the
SEC’s website at www.sec.gov. Copies will also be available at no
charge at the Company’s website at
http://investors.myrepublicbank.com.
The Securities will be offered and sold only to accredited
investors pursuant to an exemption from registration under the
Securities Act of 1933. The Securities have not been registered
under the Securities Act of 1933 or any state securities laws and
may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements of
the Securities Act of 1933 and applicable state laws.
This news release shall not constitute an offer to sell or a
solicitation of an offer to purchase the Securities or any other
securities, and shall not constitute an offer, solicitation or sale
in any state or jurisdiction in which such an offer, solicitation
or sale would be unlawful.
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version on businesswire.com: https://www.businesswire.com/news/home/20230309005895/en/
Longacre Square Partners Joe Germani / Greg Marose, 646-386-0091
jgermani@longacresquare.com /
gmarose@longacresquare.com
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