8-KShareholder MattersCorporate ChangesOther Events+1

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

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

Summary

This Form 8-K filing by Capital One Financial Corporation (COF) on November 28, 2016, details the issuance and sale of 20,000,000 depositary shares representing interests in its Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series H. This offering, which closed on November 29, 2016, generated net proceeds of approximately $483 million after deducting underwriting commissions and expenses. The issuance of this Series H Preferred Stock amends Capital One's Restated Certificate of Incorporation. A key characteristic for investors to note is that dividends on this preferred stock are non-cumulative, meaning any missed dividend payments are not carried forward. Furthermore, the ability of Capital One to pay dividends on, or repurchase, its common stock or junior preferred stock is restricted if it fails to declare and pay or set aside funds for dividends on the Series H Preferred Stock for the preceding dividend period.

Key Highlights

  • 1Capital One Financial Corporation issued and sold 20,000,000 depositary shares representing interests in Series H Fixed Rate Non-Cumulative Perpetual Preferred Stock.
  • 2The offering generated approximately $483 million in net proceeds for the company.
  • 3The Series H Preferred Stock has a liquidation preference of $25 per depositary share ($1,000 per share of Series H Preferred Stock).
  • 4Dividends on the Series H Preferred Stock are non-cumulative.
  • 5The company's ability to pay dividends on or repurchase common stock or junior preferred stock is subject to restrictions if dividends on the Series H Preferred Stock are not paid.
  • 6This issuance involved an Underwriting Agreement with several major investment banks, including Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, UBS Securities LLC, and Wells Fargo Securities, LLC.
  • 7The filing includes exhibits such as the Underwriting Agreement, Certificate of Designations for Series H Preferred Stock, and the Deposit Agreement.

Frequently Asked Questions

This 8-K filing announces and provides details regarding Capital One's issuance and sale of 20,000,000 depositary shares representing interests in its Series H Fixed Rate Non-Cumulative Perpetual Preferred Stock, as well as the related underwriting and designation documents.

The non-cumulative nature means that if Capital One does not declare and pay a dividend for a particular period, that missed dividend is lost forever. It does not accrue or need to be paid in the future.

The terms of the Series H Preferred Stock place restrictions on Capital One's ability to pay dividends on, or repurchase, its common stock or any preferred stock ranking junior to or on parity with the Series H Preferred Stock. These restrictions are triggered if Capital One fails to declare and pay (or set aside funds for) the dividends on the Series H Preferred Stock for the immediately preceding dividend period.

The net proceeds from the offering of the 20,000,000 depositary shares were approximately $483 million, after deducting underwriting commissions and estimated offering expenses.