8-KShareholder MattersCorporate ChangesOther Events+1

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Jan 29, 2008)

Filed January 29, 2008For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) filed an 8-K on January 29, 2008, primarily to report on the issuance and terms of its 7.25% Non-Cumulative Perpetual Convertible Preferred Stock, Series L. This filing details the establishment of the Series L Preferred Stock, including its liquidation preference of $1,000 per share, and the associated underwriting agreement with Banc of America Securities LLC for the offering of up to 6.9 million shares, with an additional over-allotment option exercised for 900,000 shares. The issuance of this Series L Preferred Stock introduces certain restrictions on the company's ability to pay dividends or repurchase shares of its "Junior Stock" (common stock and lower-priority stock) and "Parity Stock" if full dividends on the Series L Preferred Stock are not declared and paid. This is a material modification to the rights of other securityholders and a significant point for investors to consider regarding potential future capital allocation decisions.

Key Highlights

  • 1Bank of America issued 7.25% Non-Cumulative Perpetual Convertible Preferred Stock, Series L.
  • 2The Series L Preferred Stock has a liquidation preference of $1,000 per share.
  • 3An underwriting agreement was established for the public offering of up to 6.9 million shares, with an additional 900,000 shares purchased under an over-allotment option.
  • 4The filing details restrictions on dividends and repurchases of Junior Stock and Parity Stock if Series L Preferred Stock dividends are not met.
  • 5This issuance is considered a material modification to the rights of other securityholders.
  • 6The issuance was conducted under a Registration Statement on Form S-3, filed on a delayed basis under Rule 415.

Frequently Asked Questions

This 8-K filing announces the establishment and issuance of Bank of America's 7.25% Non-Cumulative Perpetual Convertible Preferred Stock, Series L, and the terms associated with this new class of stock.

The Series L Preferred Stock is non-cumulative, perpetual, convertible, has a par value of $0.01, and a liquidation preference of $1,000 per share. It carries a fixed dividend rate of 7.25%.

The issuance of Series L Preferred Stock imposes restrictions on Bank of America's ability to declare or pay dividends on, or repurchase, its Junior Stock (including common stock) and Parity Stock if it fails to declare and pay full dividends on the Series L Preferred Stock. This prioritizes the preferred stockholders' dividend payments.

Bank of America initially offered up to 6,900,000 shares. An additional 900,000 shares were purchased by the underwriter exercising their over-allotment option, bringing the total to 7,800,000 shares.