8-KShareholder MattersCorporate ChangesOther Events+1

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Mar 17, 2015)

Filed March 17, 2015For 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 March 17, 2015, primarily details the establishment and issuance of its Series AA Preferred Stock and associated Depositary Shares. The company filed a Certificate of Designations to define the terms of this new preferred stock, which carries a liquidation preference of $25,000 per share. This issuance is significant as it introduces restrictions on the company's ability to pay common stock dividends or repurchase shares if dividends on the Series AA Preferred Stock are not met. Furthermore, on March 17, 2015, Bank of America closed the sale of 1,900,000 Depositary Shares, each representing a 1/25th interest in a share of the Series AA Preferred Stock. This transaction, guided by a prospectus dated February 24, 2015, and a prospectus supplement from March 12, 2015, marks a key event in the company's capital structure management. Investors should note the implications of this new preferred stock on future common stock dividend capacity and overall capital flexibility.

Key Highlights

  • 1Bank of America Corporation (BAC) filed an 8-K on March 17, 2015, to report on the issuance of Series AA Preferred Stock.
  • 2A Certificate of Designations was filed to establish the terms, preferences, and rights of the Series AA Preferred Stock.
  • 3The Series AA Preferred Stock has a liquidation preference of $25,000 per share.
  • 4Failure to pay full dividends on the Series AA Preferred Stock imposes restrictions on BAC's ability to pay dividends or repurchase common stock or parity/junior preferred stock.
  • 5BAC closed the sale of 1,900,000 Depositary Shares on March 17, 2015, representing interests in the Series AA Preferred Stock.
  • 6The issuance and sale were conducted under a prospectus dated February 24, 2015, and a prospectus supplement dated March 12, 2015.

Frequently Asked Questions

The primary purpose of this 8-K filing is to inform investors about the establishment of Bank of America's Series AA Preferred Stock and the subsequent sale of Depositary Shares representing interests in this preferred stock.

The Series AA Preferred Stock has a liquidation preference of $25,000 per share. Crucially, it includes provisions that restrict Bank of America's ability to declare or pay dividends on its common stock, or repurchase shares, if it fails to pay full dividends on the Series AA Preferred Stock.

Bank of America sold 1,900,000 Depositary Shares, with each share representing a 1/25th interest in a share of the Series AA Preferred Stock.

The Series AA Preferred Stock introduces a potential constraint on the company's ability to pay dividends to common stockholders. If dividends on the Series AA Preferred Stock are not fully paid, the company's capacity to distribute dividends to common shareholders may be limited.