8-KShareholder MattersCorporate ChangesOther Events+1

CITIZENS FINANCIAL GROUP INC/RI 8-K Report, Rights Modification (Jun 4, 2020)

Filed June 4, 2020For Securities:CFGCFG-PHCFG-PECFG-PI

Summary

Citizens Financial Group, Inc. (CFG) filed this Form 8-K to report material modifications to the rights of its security holders, specifically related to the issuance of its 5.650% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series F. This new preferred stock issuance introduces restrictions on future dividend payments and share repurchases of CFG's common stock and other junior securities if dividends on the Series F Preferred Stock are not paid. Additionally, it imposes limitations on full dividend payments for equally ranking preferred stock if partial dividends are paid on the Series F Preferred Stock. The filing also details the Certificate of Designations for the Series F Preferred Stock, which was effective on June 1, 2020, and outlines the specific terms, preferences, and limitations of this new security. Furthermore, CFG entered into an underwriting agreement on May 28, 2020, for the public offering of 400,000 shares of this Series F Preferred Stock, with the agreement containing standard provisions such as representations, warranties, conditions to closing, and indemnification. This 8-K serves to file these key documents and opinions as exhibits.

Key Highlights

  • 1Citizens Financial Group (CFG) issued new 5.650% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series F.
  • 2The issuance of Series F Preferred Stock imposes dividend payment restrictions on common stock and other junior securities if preferred dividends are missed.
  • 3Limitations are placed on future preferred stock dividend payments if only partial dividends are paid on the Series F Preferred Stock.
  • 4The Certificate of Designations for the Series F Preferred Stock was filed and became effective on June 1, 2020.
  • 5CFG entered into an Underwriting Agreement for the public offering of 400,000 shares of Series F Preferred Stock on May 28, 2020.
  • 6Key exhibits filed include the Underwriting Agreement, Certificate of Designations, and legal opinions.
  • 7This issuance provides CFG with additional capital, but also introduces new constraints on its flexibility regarding common stock and future preferred stock dividends.

Frequently Asked Questions

The main impact is that if CFG fails to declare and pay (or set aside) dividends on the Series F Preferred Stock for a preceding dividend period, the company's ability to declare or pay dividends on, or purchase, redeem, or acquire shares of its common stock or any other stock ranking junior to the Series F Preferred Stock will be restricted. This means common shareholders could see a suspension of dividends or share buybacks in certain circumstances.

The issuance of Series F Preferred Stock means that if CFG decides to pay only partial dividends on the Series F Preferred Stock, it will be subject to certain limitations in declaring full dividends on any other preferred stock that ranks equally with the Series F Preferred Stock.

This Form 8-K is being filed primarily to disclose material modifications to the rights of security holders due to the new Series F Preferred Stock issuance. It also serves to file key related documents, such as the Certificate of Designations and the Underwriting Agreement, as exhibits.

The Series F Preferred Stock has a fixed dividend rate of 5.650% per annum. It is non-cumulative, meaning that any missed dividend payments are not accumulated and do not have to be paid in the future, but they do trigger the restrictions on common stock dividends as mentioned.