Summary
This 8-K filing by Goldman Sachs Group, Inc. (GS) on January 27, 2020, announces the establishment and terms of its 4.40% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series S. This issuance of preferred stock, with a liquidation preference of $25,000 per share, introduces specific covenants that will restrict the company's ability to declare or pay dividends on, or purchase, redeem, or otherwise acquire, its common stock if it fails to pay dividends on the Series S Preferred Stock. This is a significant development for common stockholders as it prioritizes the payment of preferred dividends. The filing incorporates by reference the Certificate of Designations for the Series S Preferred Stock, which details these dividend restriction provisions. Investors should pay close attention to these terms, as they impact the capital allocation flexibility of Goldman Sachs and the priority of payments to different classes of security holders. The company also filed related exhibits concerning the offering and sale of depositary shares representing interests in this new preferred stock.
Key Highlights
- 1Goldman Sachs Group, Inc. has established a new series of preferred stock: 4.40% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series S.
- 2The Series S Preferred Stock has a liquidation preference of $25,000 per share.
- 3A key feature is the non-cumulative nature of the preferred dividends, meaning missed dividends are not carried forward.
- 4Crucially, the company's ability to pay common stock dividends or repurchase common stock is restricted if it fails to pay dividends on the Series S Preferred Stock.
- 5This filing introduces a new layer of security holder priority, with preferred dividends taking precedence over common stock distributions.
- 6Additional exhibits related to the offering and legal opinions for depositary shares representing interests in the Series S Preferred Stock are included.