8-KSecurities & Listing

BANK OF AMERICA CORP /DE/ 8-K Report, Unregistered Securities Sale (Dec 16, 2011)

Filed December 16, 2011For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

This 8-K filing from Bank of America (BAC) on December 16, 2011, details the completion of a significant exchange transaction aimed at strengthening its capital position. The company entered into agreements with preferred and trust preferred security holders to exchange these securities for shares of its common stock and senior notes. Specifically, this filing covers exchanges occurring between December 2 and December 15, 2011, involving approximately $179.1 million in preferred stock and $1.6 billion in trust preferred securities in return for 88,988,700 shares of common stock and $885.4 million in senior notes. These exchanges are part of a larger, previously announced initiative by Bank of America to issue up to 400 million shares of common stock and $3 billion in senior notes in exchange for preferred stock and certain trust preferred capital debt securities. In aggregate, these completed and ongoing transactions are expected to enhance Bank of America's Tier 1 common capital by approximately $3.9 billion and increase its Tier 1 common capital ratio by roughly 29 basis points under Basel I. The transactions were conducted through privately negotiated agreements, relying on exemptions under the Securities Act of 1933.

Key Highlights

  • 1Bank of America completed multiple exchange agreements with preferred and trust preferred security holders between December 2 and December 15, 2011.
  • 2These exchanges involved a total of 88,988,700 shares of common stock and $885.4 million in senior notes issued by BAC.
  • 3In return, BAC received approximately $179.1 million in preferred stock and $1.6 billion in trust preferred securities.
  • 4This filing is part of a larger initiative to exchange up to 400 million shares of common stock and $3 billion in senior notes for legacy capital instruments.
  • 5The aggregate impact of these exchanges (including prior filings) is expected to increase Tier 1 common capital by approximately $3.9 billion.
  • 6The exchanges are anticipated to improve BAC's Tier 1 common capital ratio by approximately 29 basis points under Basel I.
  • 7The transactions were executed through privately negotiated agreements under an exemption from Securities Act registration.

Frequently Asked Questions

The primary purpose of these exchange agreements is to strengthen Bank of America's capital position by exchanging existing preferred stock and trust preferred securities for shares of its common stock and senior notes. This is part of a broader strategy to improve its regulatory capital ratios.

The aggregated exchanges are expected to result in an increase of approximately $3.9 billion in Tier 1 common capital and boost the Tier 1 common capital ratio by approximately 29 basis points under Basel I. This indicates a strengthening of the bank's core equity capital base.

Bank of America exchanged its common stock and senior notes for various series of its outstanding preferred stock and trust preferred securities (also referred to as hybrid income securities) issued by trusts formed by or on behalf of the company or its predecessors.

No, these exchanges were conducted through privately negotiated agreements with specific institutional preferred and trust preferred security holders. The issuance of common stock and senior notes in these exchanges relied on an exemption from registration under the Securities Act of 1933.