8-KOther EventsExhibits & Filings

BANK OF AMERICA CORP /DE/ 8-K Report, Corporate Update (May 25, 2012)

Filed May 25, 2012For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) announced the completion of a tender offer and repurchase of $134 million in capital securities from BAC Capital Trust VI on May 25, 2012. This action also involved the cancellation and retirement of the corresponding 5⅝% Junior Subordinated Notes, due 2035, which were held by the trust. This repurchase has a direct impact on the company's "Replacement Capital Covenant," originally established on February 16, 2007. Consequently, the 5⅝% Junior Subordinated Notes have ceased to be the designated "covered debt" under this covenant. Effective immediately, BAC's 6⅞% Junior Subordinated Notes, due 2055, which are underlying the capital securities of BAC Capital Trust XII, have been redesignated as the covered debt for the purposes of this covenant. Investors should note this change in the specific debt instrument linked to the Replacement Capital Covenant.

Key Highlights

  • 1BAC completed a tender offer and repurchase of $134 million aggregate liquidation amount of capital securities from BAC Capital Trust VI.
  • 2The repurchase led to the cancellation and retirement of $134 million of BAC's 5⅝% Junior Subordinated Notes due 2035.
  • 3This action changes the specific debt covered under a Replacement Capital Covenant dated February 16, 2007.
  • 4The 5⅝% Junior Subordinated Notes, due 2035, are no longer the "covered debt" under the Replacement Capital Covenant.
  • 5Effective May 25, 2012, BAC's 6⅞% Junior Subordinated Notes due 2055 became the new "covered debt" for the Replacement Capital Covenant.
  • 6The redesignated covered debt is associated with capital securities of BAC Capital Trust XII.

Frequently Asked Questions

The primary event is Bank of America Corporation's (BAC) completion of a tender offer to repurchase $134 million of capital securities from BAC Capital Trust VI and the subsequent cancellation of the underlying 5⅝% Junior Subordinated Notes due 2035.

The repurchase and retirement of the 5⅝% Junior Subordinated Notes mean they are no longer the 'covered debt' under the Replacement Capital Covenant. The company has redesignated its 6⅞% Junior Subordinated Notes due 2055 (underlying BAC Capital Trust XII securities) as the new covered debt under this covenant, effective May 25, 2012.

The Replacement Capital Covenant is a contractual agreement related to debt issuance, often tied to regulatory capital requirements or specific financing structures. The change in covered debt indicates a shift in which specific debt instruments are subject to the terms and obligations of this covenant, which could have implications for future debt management and financial flexibility.

While $134 million of specific junior subordinated notes were retired, this filing focuses on the change in designation under a particular covenant. The overall impact on BAC's total debt would depend on other ongoing debt management activities and would require a broader review of the company's financial statements.