Summary
Bank of America Corporation (BAC) filed an 8-K on May 16, 2018, to announce the issuance of 54,000,000 Depositary Shares, each representing a 1/1,000th interest in a share of its newly established 6.000% Non-Cumulative Preferred Stock, Series GG. This preferred stock has a liquidation preference of $25,000 per share. The filing details the terms of this preferred stock, including restrictions on common stock dividends and repurchases if full dividends on the Series GG Preferred Stock are not paid. This action represents a capital raising event through the issuance of preferred equity. Investors should note that the issuance of this preferred stock and its associated terms are designed to enhance the company's capital position. The "non-cumulative" nature means that any missed dividend payments are not carried forward. The restrictions tied to dividend payments on this series are a key feature that could impact the company's flexibility in returning capital to common shareholders in certain scenarios.
Key Highlights
- 1Bank of America issued 54,000,000 Depositary Shares representing a 1/1,000th interest in Series GG Preferred Stock.
- 2The Series GG Preferred Stock carries a fixed dividend rate of 6.000% and is non-cumulative.
- 3Each share of Series GG Preferred Stock has a liquidation preference of $25,000.
- 4The company filed a Certificate of Designations to establish the terms and rights of the Series GG Preferred Stock.
- 5Restrictions are in place that could limit BAC's ability to pay common stock dividends or repurchase shares if Series GG Preferred dividends are not met.
- 6The offering was made pursuant to a Prospectus dated May 1, 2015, and supplemented on May 7, 2018.
- 7This filing effectively details a capital raise through the issuance of preferred securities.