8-KShareholder MattersCorporate ChangesOther Events+1

BANK OF AMERICA CORP /DE/ 8-K Report, Rights Modification (Mar 10, 2016)

Filed March 10, 2016For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) filed an 8-K on March 10, 2016, to report the issuance of 40,000 shares of its Series DD Preferred Stock. This filing details the terms and conditions associated with this new class of preferred stock, including its liquidation preference of $25,000 per share. The issuance of Series DD Preferred Stock introduces specific restrictions on BAC's ability to pay dividends on or repurchase common stock or other junior or parity preferred stock if full dividends on the Series DD Preferred Stock are not declared and paid. Additionally, the company closed the sale of 1,000,000 Depositary Shares, each representing a 1/25th interest in a share of the Series DD Preferred Stock. This action is part of BAC's ongoing capital management and financing activities.

Key Highlights

  • 1Bank of America issued 40,000 shares of Series DD Preferred Stock on March 10, 2016.
  • 2The Series DD Preferred Stock has a liquidation preference of $25,000 per share.
  • 3Restrictions are in place for common stock dividends and repurchases if Series DD Preferred dividends are not paid in full.
  • 41,000,000 Depositary Shares, each representing a 1/25th interest in a Series DD Preferred share, were sold.
  • 5The filing includes a Certificate of Designations amending the company's charter to define the terms of the Series DD Preferred Stock.
  • 6Related exhibits include the underwriting agreement, deposit agreement, and legal opinions concerning the issuance.

Frequently Asked Questions

The Series DD Preferred Stock is a new class of preferred stock issued by Bank of America Corporation, with specific designations, preferences, limitations, and relative rights as defined in a Certificate of Designations filed with Delaware. It carries a liquidation preference of $25,000 per share.

The primary implication for common stockholders is that Bank of America's ability to declare or pay dividends on, or repurchase, common stock (or other junior or parity preferred stock) is restricted if full dividends on the Series DD Preferred Stock are not declared and paid. This prioritizes payments to Series DD Preferred stockholders.

Depositary Shares are fractional interests in shares of preferred stock of a company, in this case, representing a 1/25th interest in a share of the Series DD Preferred Stock. They are issued by a depositary bank and make preferred stock more accessible to a broader range of investors.

This filing relates to the issuance and sale of preferred stock and depositary shares, which is a common capital-raising activity for large financial institutions. It does not, in itself, indicate financial distress but rather a method of managing capital structure and meeting regulatory or business needs.