8-KShareholder MattersCorporate ChangesOther Events+1

CAPITAL ONE FINANCIAL CORP 8-K Report, Rights Modification (Sep 11, 2019)

Filed September 11, 2019For Securities:COFCOF-PLCOF-PICOF-PKCOF-PNCOF-PJ

Summary

Capital One Financial Corporation (COF) has filed an 8-K report detailing a significant capital raise through the issuance of preferred stock. On September 11, 2019, the company sold 60,000,000 depositary shares, each representing a 1/40th interest in its Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series I. This offering raised approximately $1.462 billion in net proceeds after deducting expenses. The Series I Preferred Stock carries a liquidation preference of $25 per depositary share and is subject to certain dividend and repurchase restrictions. Specifically, the company's ability to pay dividends on, or repurchase, its common stock or parity/junior preferred stock is contingent upon declared and paid dividends on the Series I Preferred Stock for the preceding dividend period. This filing establishes the terms and conditions of this new preferred stock issuance, amending the company's Restated Certificate of Incorporation.

Key Highlights

  • 1Capital One Financial Corp. successfully raised approximately $1.462 billion in net proceeds through the sale of 60,000,000 depositary shares of its Series I Fixed Rate Non-Cumulative Perpetual Preferred Stock.
  • 2The offering involved depositary shares, each representing a 1/40th ownership interest in the Series I Preferred Stock, with a liquidation preference of $25 per depositary share.
  • 3A Certificate of Designations was filed on September 10, 2019, establishing the terms, rights, and preferences of the Series I Preferred Stock.
  • 4The issuance of this preferred stock amends Capital One's Restated Certificate of Incorporation.
  • 5Dividends on the Series I Preferred Stock are non-cumulative.
  • 6Restrictions are in place regarding the company's ability to pay dividends on or repurchase its common stock or junior/parity preferred stock if dividends on the Series I Preferred Stock are not declared and paid or set aside for the preceding period.
  • 7The offering was conducted under an Underwriting Agreement with a syndicate of underwriters, including BofA Securities, J.P. Morgan Securities, Morgan Stanley & Co., UBS Securities, and Wells Fargo Securities.

Frequently Asked Questions

The primary purpose of this 8-K filing was to report the issuance and sale of 60,000,000 depositary shares of Capital One's Series I Fixed Rate Non-Cumulative Perpetual Preferred Stock, which raised approximately $1.462 billion in net proceeds. It also detailed the establishment of the terms of this new preferred stock.

The Series I Preferred Stock is a fixed rate, non-cumulative perpetual preferred stock. Each depositary share represents a 1/40th ownership interest and has a liquidation preference of $25. Dividends are non-cumulative, and there are restrictions on Capital One's ability to pay dividends on or repurchase its common stock or other junior/parity preferred stock if dividends on the Series I Preferred Stock are not met for the preceding period.

The offering significantly increased Capital One's capital by approximately $1.462 billion. This can strengthen the company's balance sheet and enhance its regulatory capital ratios, potentially supporting future lending activities and operational flexibility. However, it also introduces a new fixed dividend obligation that must be managed.

Yes, there are restrictions. If Capital One fails to declare and pay (or set aside funds for) the dividends on the Series I Preferred Stock for the immediately preceding dividend period, its ability to pay dividends on, or repurchase, its common stock or any preferred stock ranking on parity with or junior to the Series I Preferred Stock will be restricted.