8-KSecurities & ListingOther EventsExhibits & Filings

BANK OF AMERICA CORP /DE/ 8-K Report, Unregistered Securities Sale (Jun 2, 2009)

Filed June 2, 2009For 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 June 2, 2009, primarily details significant capital-raising activities through the exchange of preferred stock for common stock. Specifically, the company entered into agreements to exchange approximately $3.6 billion in preferred stock for about 267 million shares of common stock, representing roughly 3.3% of its outstanding common shares. This transaction is structured under Section 3(a)(9) of the Securities Act of 1933, indicating it's a private exchange with existing security holders without the involvement of commissions. Furthermore, the report updates prior disclosures, stating that as of June 1, 2009, Bank of America has agreed to exchanges totaling approximately $9.5 billion of preferred stock for around 704 million shares of common stock. This substantial exchange aims to strengthen the company's capital position by converting preferred obligations into common equity, a move that will dilute existing common shareholders but increase the company's overall equity base during a challenging financial period.

Key Highlights

  • 1Bank of America is exchanging approximately $3.6 billion of preferred stock for 267.4 million shares of common stock.
  • 2This exchange represents about 3.3% of the company's currently outstanding common stock.
  • 3The transactions are being conducted under the Section 3(a)(9) exemption of the Securities Act of 1933.
  • 4As of June 1, 2009, total agreed-upon preferred stock exchanges amount to approximately $9.5 billion for 704 million shares of common stock.
  • 5The exchange involves various series of non-cumulative preferred stock.
  • 6This move is part of Bank of America's broader capital raising and balance sheet strengthening efforts.

Frequently Asked Questions

The primary purpose of these exchanges is to strengthen Bank of America's capital position by converting preferred stock into common equity. This helps the company meet regulatory requirements and improve its financial flexibility during a period of market stress.

These exchanges will result in the issuance of a significant number of new common shares (approximately 704 million shares in total as of June 1, 2009). This will dilute the ownership stake of existing common shareholders and can potentially impact earnings per share.

Section 3(a)(9) of the Securities Act of 1933 allows for an exemption from registration requirements for securities exchanged by the issuer with its existing security holders, provided no commission or remuneration is paid for soliciting the exchange. This suggests Bank of America is directly negotiating with its preferred shareholders to facilitate these exchanges efficiently.

As of June 1, 2009, Bank of America has entered into agreements to exchange preferred stock with an aggregate liquidation preference of approximately $9.5 billion for common stock.