8-KShareholder MattersCorporate ChangesOther Events+1

MORGAN STANLEY 8-K Report, Rights Modification (Sep 18, 2014)

Filed September 18, 2014For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley filed an 8-K report detailing the establishment and issuance of its Series I Preferred Stock. This new class of stock, designated as Fixed-to-Floating Rate Non-Cumulative Preferred Stock, has a liquidation preference of $25,000 per share. The key implication for investors is that the issuance of this Series I Preferred Stock imposes restrictions on Morgan Stanley's ability to declare or pay dividends, or to purchase, redeem, or otherwise acquire its "junior stock" (which includes common stock) if it fails to pay full dividends on the Series I Preferred Stock. This filing effectively subordinates dividend payments and capital distributions on common stock to the preferential dividend rights of this newly established preferred stock series.

Key Highlights

  • 1Morgan Stanley established and issued Series I Preferred Stock, a Fixed-to-Floating Rate Non-Cumulative Preferred Stock.
  • 2The Series I Preferred Stock has a liquidation preference of $25,000 per share.
  • 3The issuance of Series I Preferred Stock imposes restrictions on dividend payments and capital distributions to junior stock, including common stock, if preferred dividends are not met.
  • 4This filing details amendments to Morgan Stanley's Certificate of Incorporation to establish the terms of the Series I Preferred Stock.
  • 5The report includes various exhibits related to the Series I Preferred Stock, including Certificates of Designation, forms of certificates, and deposit agreements.

Frequently Asked Questions

The primary impact on common stock is that if Morgan Stanley fails to declare and pay full dividends on its Series I Preferred Stock, it will be restricted from declaring or paying dividends, or purchasing, redeeming, or acquiring its junior stock, which includes common stock. This means common stockholders' ability to receive dividends or capital distributions is subordinate to the preferred stockholders' dividend rights.

The Series I Preferred Stock is a Fixed-to-Floating Rate Non-Cumulative Preferred Stock with a liquidation preference of $25,000 per share. It ranks senior to junior stock regarding dividends and liquidation distributions.

Junior stock refers to any class or series of Morgan Stanley's capital stock that ranks lower than the Series I Preferred Stock in terms of priority for dividend payments and distribution of assets upon liquidation, dissolution, or winding up. This definition explicitly includes Morgan Stanley's common stock.

The Certificate of Designation establishing the terms of the Series I Preferred Stock was filed on September 17, 2014, with the Secretary of State of Delaware. The terms are detailed in the Certificate of Designation, which is filed as Exhibit 3.1 and 4.1 to this 8-K filing.