Summary
This 8-K filing from The Bank of New York Mellon Corporation (BK), filed on July 21, 2011, primarily serves to incorporate by reference their second-quarter 2011 earnings press release and announce a significant strategic divestiture. Investors should note the company's intention to sell a majority equity stake in ConvergEx Group through an all-cash transaction, which is expected to strengthen its capital structure and focus its business operations. Additionally, the filing addresses concerns regarding the company's credit ratings. It highlights Moody's Investors Service's decision to place BK's supported ratings under review for a possible downgrade, directly linked to Moody's review of the U.S. government's Aaa rating. While Moody's stated this action does not reflect a change in BK's standalone financial strength, it underscores the potential impact of broader economic and regulatory factors on the company's funding costs and access to capital.
Key Highlights
- 1BK filed an 8-K on July 21, 2011, to incorporate its Q2 2011 earnings press release (Exhibit 99.1) and announce the sale of a majority stake in ConvergEx Group (Exhibit 99.2).
- 2The company announced a definitive agreement to sell a majority of its equity stake in ConvergEx Group to funds advised by CVC Capital Partners in an all-cash transaction.
- 3The sale of ConvergEx Group is expected to close in early fall 2011.
- 4Moody's Investors Service placed BK's supported ratings (deposit, senior debt, senior subordinated debt) under review for possible downgrade on July 18, 2011.
- 5This rating action by Moody's is directly related to Moody's review of the U.S. government's Aaa rating.
- 6Moody's explicitly stated that the review of BK's ratings does not reflect a change in the company's standalone financial strength.
- 7The filing notes a prior change by Moody's on June 2, 2011, where the rating outlook for BK's debt was changed to negative from stable due to reassessed systemic support assumptions and the impact of the Dodd-Frank Act.