Summary
Capital One Financial Corporation (COF) has filed an 8-K report detailing the issuance and sale of 20,000,000 depositary shares on October 31, 2014. Each depositary share represents a 1/40th interest in a share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series D. This transaction effectively raises capital for the company through the issuance of preferred stock. The net proceeds from this offering are approximately $484.4 million, after deducting underwriting commissions and expenses.
Key Highlights
- 1Issuance of 20,000,000 depositary shares representing Series D Preferred Stock.
- 2Each depositary share represents a 1/40th interest in a share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series D.
- 3The Series D Preferred Stock has a liquidation preference of $25 per depositary share ($1,000 per share of preferred stock).
- 4Net proceeds from the offering approximated $484.4 million after expenses.
- 5The issuance of Series D Preferred Stock may impose restrictions on the company's ability to pay dividends or repurchase common/junior preferred stock if dividends on Series D Preferred Stock are not declared or paid.
- 6The offering was conducted under a prospectus supplement and an effective registration statement on Form S-3.
- 7Key agreements filed include the Underwriting Agreement, Certificate of Designations, and Deposit Agreement.
Frequently Asked Questions
This 8-K filing announces the closing of an offering where Capital One Financial Corporation issued and sold 20,000,000 depositary shares, which represent interests in its Series D Fixed Rate Non-Cumulative Perpetual Preferred Stock. This is a method of raising capital for the company.
Capital One raised approximately $484.4 million in net proceeds from the offering of these depositary shares, after accounting for underwriting commissions and other offering expenses.
The Series D Preferred Stock is a fixed-rate, non-cumulative perpetual preferred stock. Each depositary share represents a 1/40th interest and has a liquidation preference of $25 per depositary share. Importantly, the company's ability to pay dividends on or repurchase its common stock or other junior preferred stock is restricted if dividends on the Series D Preferred Stock are not declared or paid.
While this offering raises capital, investors should note that the terms of the Series D Preferred Stock include a provision that restricts the company's ability to pay dividends on or repurchase common stock if dividends on the Series D Preferred Stock are missed. This prioritizes preferred stockholders in dividend distributions.