8-KShareholder MattersCorporate ChangesOther Events+1

CAPITAL ONE FINANCIAL CORP 8-K Report, Rights Modification (Jul 29, 2016)

Filed July 29, 2016For Securities:COFCOF-PLCOF-PICOF-PKCOF-PNCOF-PJ

Summary

Capital One Financial Corporation (COF) announced on July 29, 2016, the successful issuance and sale of 24,000,000 depositary shares. Each depositary share represents a 1/40th interest in the company's Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series G. This offering, which generated net proceeds of approximately $583 million after expenses, was conducted under an underwriting agreement with several prominent financial institutions. The Series G Preferred Stock carries a liquidation preference of $25 per depositary share ($1,000 per full share) and its terms, including voting, dividend, redemption, and liquidation rights, were established through a Certificate of Designations filed with the State of Delaware. Importantly, the terms of this preferred stock include provisions that may restrict Capital One's ability to pay dividends on, repurchase, or redeem its common stock or other parity or junior preferred stock if it fails to declare and pay (or set aside funds for) dividends on the Series G Preferred Stock for the preceding dividend period. This filing details the material modifications to security holder rights and amendments to the company's Restated Certificate of Incorporation related to this new preferred stock issuance.

Key Highlights

  • 1Capital One Financial Corporation issued and sold 24,000,000 depositary shares representing interests in Series G Preferred Stock.
  • 2The offering generated net proceeds of approximately $583 million.
  • 3The Series G Preferred Stock is a fixed-rate, non-cumulative, perpetual preferred stock.
  • 4Dividends on the Series G Preferred Stock are non-cumulative.
  • 5The issuance of Series G Preferred Stock may impose restrictions on future dividend payments or repurchases of common stock or other junior/parity preferred stock if dividends on Series G are not met.
  • 6The filing includes the Underwriting Agreement, Certificate of Designations, and Deposit Agreement as exhibits.
  • 7The offering was made under a Form S-3 registration statement.

Frequently Asked Questions

This Form 8-K filing announces and provides details regarding Capital One's issuance and sale of 24,000,000 depositary shares representing interests in its Series G Preferred Stock. It outlines the terms of this new preferred stock, the related underwriting agreement, and the material modifications to security holder rights.

The issuance raised approximately $583 million in net proceeds for Capital One. The Series G Preferred Stock has specific dividend and redemption terms, and critically, it includes covenants that could restrict the company's ability to pay dividends or repurchase its common stock or other junior/parity preferred stock if dividends on the Series G Preferred Stock are not met.

For existing common shareholders, the Series G Preferred Stock is a new class of security that ranks senior to common stock in terms of dividend preference and liquidation preference. The non-cumulative nature of its dividends means missed payments do not accrue. Furthermore, the potential restrictions on Capital One's ability to pay dividends or repurchase its common stock, if dividends on the Series G Preferred Stock are not made, could impact future returns or capital allocation strategies for common shareholders.

'Non-cumulative' means that if Capital One does not declare and pay (or set aside funds for) a dividend on the Series G Preferred Stock for any given dividend period, that missed dividend is permanently forfeited and does not accrue or become payable at a later date. This is a key distinction from cumulative preferred stock.