8-KLeadership ChangesRegulation FDOther Events+1

FIFTH THIRD BANCORP 8-K Report, Executive Changes (Jul 2, 2009)

Filed July 2, 2009For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) filed an 8-K on July 2, 2009, to report the closing of a significant transaction involving its processing business. The company sold a majority interest in its processing subsidiary, Fifth Third Processing Solutions, LLC (FTPS LLC), to Advent International (Advent) for approximately $560 million. This strategic move involved contributing assets to a new holding company (Holdco), in which Advent acquired about 51% and Fifth Third retained a 49% stake. In addition to the cash infusion, Fifth Third provided substantial debt financing to FTPS LLC through its subsidiaries, totaling $1.25 billion in loans and a $125 million revolving credit facility. The company also received warrants to purchase additional equity in Holdco. The transaction involved a change in leadership for the processing business, with Charles Drucker resigning as Executive Vice President of Fifth Third Bancorp to become President and CEO of the newly structured FTPS LLC.

Key Highlights

  • 1Fifth Third Bancorp completed the sale of a majority (approx. 51%) stake in its processing business (FTPS LLC) to Advent International for approximately $560 million.
  • 2The transaction resulted in the formation of a new holding company (Holdco) where Fifth Third retains a 49% equity interest.
  • 3Fifth Third Bancorp provided significant debt financing to the newly formed entity, totaling $1.25 billion in loans and a $125 million revolving credit facility.
  • 4Fifth Third Bancorp received warrants that could allow for the purchase of up to an additional 10% equity interest in Holdco under certain circumstances.
  • 5Charles Drucker resigned from his role as Executive Vice President of Fifth Third Bancorp to assume the position of President and CEO of FTPS LLC.
  • 6Advent International will have the majority representation on the Holdco board with 5 directors, while Fifth Third will appoint 4 directors.
  • 7The deal includes provisions for a potential public offering of Holdco securities after three years, giving Fifth Third registration rights.

Frequently Asked Questions

This 8-K filing reports the completion of a significant transaction where Fifth Third Bancorp sold a majority interest in its processing business to Advent International. It details the sale terms, financing provided, and leadership changes related to this divestiture.

Fifth Third Bancorp received approximately $560 million in cash from Advent International for the sale of its majority interest in the processing business.

Fifth Third Bancorp retained a 49% equity interest in the new holding company that owns the processing business. Additionally, the bank provided substantial debt financing to the entity and received warrants for potential future equity purchases.

Charles Drucker, formerly an Executive Vice President at Fifth Third Bancorp, has moved to lead the separated processing business as its President and CEO. This suggests a strategic focus on managing the processing operations as a distinct entity.