8-KOther EventsExhibits & Filings

CAPITAL ONE FINANCIAL CORP 8-K Report, Corporate Update (Aug 6, 2009)

Filed August 6, 2009For Securities:COFCOF-PLCOF-PICOF-PKCOF-PNCOF-PJ

Summary

This Form 8-K filing by Capital One Financial Corporation (COF) on August 5, 2009, announces the closing of a public offering of $1 billion in 10.25% Cumulative Trust Preferred Securities (Trust Preferred Securities) issued by a statutory trust (Capital One Capital V). These securities represent preferred beneficial interests in the trust and are guaranteed on a subordinated basis by Capital One. The proceeds from this offering, along with proceeds from the sale of the trust's common securities, were invested by the trust in Capital One's 10.25% Junior Subordinated Debt Securities due 2039. This transaction, executed during a period of financial market stress, aimed to bolster Capital One's capital structure. The filing also includes opinions from legal counsel regarding tax matters related to the issuance.

Key Highlights

  • 1Capital One successfully closed a $1 billion public offering of Trust Preferred Securities.
  • 2The offering was made through a statutory trust, Capital One Capital V.
  • 3The Trust Preferred Securities carry a 10.25% cumulative dividend rate.
  • 4Capital One provided a subordinated guarantee for the Trust Preferred Securities.
  • 5Proceeds were invested in Capital One's 10.25% Junior Subordinated Debt Securities due 2039.
  • 6The transaction was completed on August 5, 2009.
  • 7Legal opinions regarding tax matters were filed as exhibits.

Frequently Asked Questions

The primary purpose was to raise capital and strengthen Capital One's financial position. The proceeds were used to purchase junior subordinated debt issued by Capital One, effectively enhancing the company's capital base.

Trust Preferred Securities are hybrid securities that have characteristics of both debt and equity. In this case, they represent preferred beneficial interests in a trust, which in turn holds subordinated debt issued by Capital One. They typically offer a fixed dividend payment and have a maturity date.

The subordinated guarantee means that Capital One is obligated to make payments on the Trust Preferred Securities if the issuing trust cannot. However, this guarantee is subordinated to other senior debt obligations of Capital One, meaning that in the event of Capital One's insolvency, holders of the Trust Preferred Securities would be paid only after senior creditors.

Form S-3 is an 'all-purpose' registration statement that allows well-established public companies, like Capital One, to register securities offerings on a delayed or continuous basis. This indicates Capital One met the eligibility requirements for using this simplified registration process.