8-KShareholder MattersCorporate ChangesOther Events+1

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Nov 20, 2007)

Filed November 20, 2007For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

This Form 8-K filing by Bank of America Corporation (BAC) on November 20, 2007, primarily details the terms and conditions of a newly issued 7.25% Non-Cumulative Preferred Stock, Series J. The issuance, which includes 36,000,000 Depositary Shares each representing a 1/1,000th interest in a share of the preferred stock, was approved and ratified on November 14, 2007, with an underwriting agreement also executed on the same date. An over-allotment option for an additional 5,400,000 Depositary Shares was granted to underwriters. The most significant impact for investors relates to the modification of rights for existing securityholders. Specifically, the issuance of this Series J Preferred Stock introduces restrictions on Bank of America's ability to declare or pay dividends, repurchase, or redeem shares of its Junior Stock (including common stock) and Parity Stock. These restrictions are triggered if the company fails to declare and pay full dividends on the Series J Preferred Stock, aiming to prioritize payments to these preferred shareholders.

Key Highlights

  • 1Bank of America issued 7.25% Non-Cumulative Preferred Stock, Series J, through Depositary Shares.
  • 2The issuance consists of 36,000,000 Depositary Shares, with an option for an additional 5,400,000.
  • 3The Series J Preferred Stock has a liquidation preference of $25,000 per share.
  • 4Restrictions are placed on dividends and repurchases of Junior Stock and Parity Stock if Series J Preferred dividends are not paid.
  • 5This filing establishes the terms and conditions for the Series J Preferred Stock and its associated Depositary Shares.
  • 6The company entered into an underwriting agreement for the offering on November 14, 2007.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report the material modification to the rights of securityholders due to the issuance of Bank of America's 7.25% Non-Cumulative Preferred Stock, Series J, and to disclose the terms and conditions of this new preferred stock offering.

Depositary Shares are fractional interests in shares of preferred stock. In this case, each Depositary Share represents a 1/1,000th interest in a share of the Bank of America 7.25% Non-Cumulative Preferred Stock, Series J. Investors typically purchase Depositary Shares as they are more easily tradable than the higher par value preferred stock.

The issuance of the Series J Preferred Stock introduces a significant restriction. If Bank of America fails to declare and pay full dividends on the Series J Preferred Stock, the company will be restricted from declaring or paying dividends, repurchasing, or redeeming shares of its Junior Stock (which includes common stock) and Parity Stock.

The Series J Preferred Stock has a dividend rate of 7.25% and is designated as 'Non-Cumulative.' This means that if a dividend payment is missed, it is not accumulated and will not be paid in the future; the right to that missed dividend is lost.