8-KShareholder MattersCorporate ChangesOther Events+1

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Sep 26, 2007)

Filed September 26, 2007For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

This 8-K filing by Bank of America Corporation (BAC) on September 26, 2007, details the establishment and public offering of its 6.625% Non-Cumulative Preferred Stock, Series I. This issuance involved 22,000,000 Depositary Shares, each representing a 1/1000th interest in a share of the preferred stock, with an option for underwriters to purchase an additional 3,300,000 Depositary Shares. The filing specifies the terms and conditions of this preferred stock, including its liquidation preference of $25,000 per share. A key implication for existing shareholders is that the declaration and payment of dividends or distributions, as well as any repurchases of the company's "Junior Stock" (which includes common stock), will be restricted if the company fails to declare and pay full dividends on the newly issued Series I Preferred Stock. This filing marks a significant capital-raising event for Bank of America during a period of evolving market conditions.

Key Highlights

  • 1Bank of America issued 22,000,000 Depositary Shares representing interests in its 6.625% Non-Cumulative Preferred Stock, Series I.
  • 2An over-allotment option for an additional 3,300,000 Depositary Shares was granted to underwriters.
  • 3The Series I Preferred Stock has a liquidation preference of $25,000 per share.
  • 4The issuance imposes restrictions on dividends and repurchases of 'Junior Stock' (including common stock) if preferred stock dividends are not met.
  • 5The filing establishes the specific preferences, limitations, and rights of the Series I Preferred Stock through a Certificate of Designations filed with Delaware.
  • 6The offering was conducted under a Registration Statement on Form S-3, utilizing Rule 415 for delayed issuance.

Frequently Asked Questions

This 8-K filing announces the establishment and public offering of Bank of America's 6.625% Non-Cumulative Preferred Stock, Series I, through the issuance of Depositary Shares. It details the terms of the preferred stock and the underwriting agreement for its sale.

If Bank of America fails to declare and pay full dividends on the Series I Preferred Stock, its ability to declare or pay dividends, or to repurchase, redeem, or acquire for consideration its Junior Stock (which includes common stock) will be restricted. This prioritizes payments to preferred stockholders.

The Series I Preferred Stock provides Bank of America with a source of capital. It has a liquidation preference of $25,000 per share, meaning in a liquidation event, holders of this preferred stock would have a claim on assets up to this amount per share before common stockholders receive anything. The 6.625% dividend rate indicates the cost of this capital.

The underwriting agreement was entered into on September 20, 2007, for the sale of the Depositary Shares. The Certificate of Designations for the Series I Preferred Stock was filed on September 25, 2007, and this 8-K was filed on September 26, 2007, reporting on these events.