8-KShareholder MattersCorporate ChangesOther Events+1

GOLDMAN SACHS GROUP INC 8-K Report, Rights Modification (Apr 28, 2014)

Filed April 28, 2014For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

This Form 8-K filing from The Goldman Sachs Group, Inc. (GS) on April 28, 2014, primarily reports on the establishment and terms of two new series of preferred stock: Series K and Series L. These issuances, formalized on April 24, 2014, through Certificates of Designations filed with Delaware, introduce specific dividend rights and potential restrictions on common stock actions. Specifically, the Series K Preferred Stock carries a 6.375% fixed-to-floating rate, and the Series L Preferred Stock carries a 5.70% fixed-to-floating rate. A key takeaway for investors is that failure to pay dividends on these preferred stock series will trigger restrictions on Goldman Sachs' ability to declare or pay dividends on, or purchase, redeem, or otherwise acquire, its common stock. This filing also references related exhibits concerning the offering and issuance of depositary shares representing interests in these preferred stocks.

Key Highlights

  • 1Goldman Sachs established two new series of preferred stock: Series K (6.375% fixed-to-floating rate) and Series L (5.70% fixed-to-floating rate).
  • 2These preferred stock issuances were formalized through Certificates of Designations filed with the State of Delaware on April 24, 2014.
  • 3A significant restriction is imposed on common stock dividends and repurchases if the company fails to pay dividends on the Series K or Series L preferred stock.
  • 4The filing includes Certificates of Designations for both Series K and Series L preferred stock as exhibits.
  • 5Additional exhibits relate to the offering and sale of depositary shares representing interests in these new preferred stock series.
  • 6The purpose of these issuances is to be offered and sold under an existing Registration Statement on Form S-3.

Frequently Asked Questions

The Series K Preferred Stock has a dividend rate of 6.375% fixed-to-floating, and the Series L Preferred Stock has a dividend rate of 5.70% fixed-to-floating. Both have a liquidation preference of $25,000 per share and are non-cumulative.

A crucial implication is that if Goldman Sachs fails to pay dividends on either the Series K or Series L Preferred Stock, it will face restrictions on its ability to pay dividends on, or repurchase, its common stock. This prioritizes preferred stockholders' dividend payments.

While the 8-K doesn't explicitly state the strategic 'why,' the filing indicates these securities are being offered and sold under an existing Form S-3 registration statement, suggesting a capital-raising activity to strengthen the balance sheet or fund operations, potentially to meet regulatory capital requirements or to finance business activities.

The detailed terms are outlined in the Certificates of Designations for the Series K Preferred Stock (Exhibit 3.1) and the Series L Preferred Stock (Exhibit 3.2) filed with this Form 8-K. These documents are incorporated by reference and provide the legal specifics of each series.