8-KShareholder MattersCorporate ChangesOther Events+1

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (May 23, 2008)

Filed May 23, 2008For 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 May 23, 2008, primarily details the issuance and terms of its 8.20% Non-Cumulative Preferred Stock, Series H. The company filed a Certificate of Designations with the Delaware Secretary of State to establish the preferences and rights of this new preferred stock, which has a liquidation preference of $25,000 per share. Furthermore, the filing reports on the public offering of 108,000,000 Depositary Shares, each representing a 1/1,000th interest in a share of the Series H Preferred Stock. An underwriting agreement was executed on May 20, 2008, with provisions for an over-allotment option for the underwriters. Importantly, the issuance of this Series H Preferred Stock imposes restrictions on BAC's ability to declare or pay dividends on, or repurchase, redeem, or acquire its Junior Stock and Parity Stock in the event of a failure to pay full dividends on the Series H Preferred Stock.

Key Highlights

  • 1Bank of America Corporation issued 8.20% Non-Cumulative Preferred Stock, Series H.
  • 2The Series H Preferred Stock has a liquidation preference of $25,000 per share.
  • 3108,000,000 Depositary Shares were offered, each representing a 1/1,000th interest in a share of the Series H Preferred Stock.
  • 4An over-allotment option of up to 16,200,000 additional Depositary Shares was granted to underwriters.
  • 5The filing establishes restrictions on dividends and repurchases of BAC's Junior and Parity Stock if Series H Preferred Stock dividends are not paid in full.
  • 6The issuance is documented via a Certificate of Designations and an Underwriting Agreement.
  • 7This action was approved and ratified by a Board-appointed Committee.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report the establishment and offering of Bank of America's 8.20% Non-Cumulative Preferred Stock, Series H, and the related Depositary Shares. It details the terms, preferences, and restrictions associated with this new class of preferred stock.

The most significant implication for existing common shareholders (Junior Stock) is that the company's ability to pay dividends or repurchase common stock is now subordinate to its obligation to pay dividends on the Series H Preferred Stock. Failure to meet these preferred stock dividend obligations could restrict distributions to common shareholders.

The Series H Preferred Stock carries a dividend rate of 8.20% and has a liquidation preference of $25,000 per share.

The 'non-cumulative' feature means that if Bank of America fails to declare and pay dividends for a specific period, those missed dividends are forfeited and do not accumulate. However, the company is restricted from paying dividends on its junior and parity stock if it fails to pay the full dividends on the Series H Preferred Stock for the current period.