Summary
Capital One Financial Corporation (COF) filed an 8-K on August 20, 2012, to report on the issuance and sale of 35,000,000 depositary shares of its Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B. Each depositary share represents a 1/40th interest in a share of preferred stock with a liquidation preference of $25 per depositary share. The total gross proceeds from this offering are expected to be approximately $853 million after deducting underwriting commissions and expenses. This issuance involves material modifications to the rights of security holders through the establishment of the Series B Preferred Stock, which carries specific dividend, voting, redemption, and liquidation rights. Importantly, the terms of the Series B Preferred Stock impose restrictions on Capital One's ability to pay dividends on or repurchase its common stock or other junior/parity preferred stock if it fails to declare and pay dividends on the Series B Preferred Stock for the preceding dividend period. The filing also includes details on the Underwriting Agreement with several major financial institutions and the Certificate of Designations that outlines the terms of the new preferred stock.
Key Highlights
- 1Capital One issued and sold 35,000,000 depositary shares of Series B Preferred Stock.
- 2Each depositary share represents a 1/40th interest in a share of preferred stock with a $25 liquidation preference ($1,000 per share of Series B Preferred Stock).
- 3The offering is expected to generate approximately $853 million in net proceeds after expenses.
- 4The Series B Preferred Stock issuance imposes restrictions on dividends and repurchases of common stock or parity/junior preferred stock if dividends on Series B Preferred Stock are not met.
- 5The Certificate of Designations establishing the Series B Preferred Stock was filed with Delaware on August 16, 2012.
- 6An Underwriting Agreement was entered into with Merrill Lynch, J. P. Morgan, Morgan Stanley, UBS, and Wells Fargo Securities.
- 7The offering was made pursuant to an effective registration statement on Form S-3.