8-KShareholder MattersCorporate ChangesOther Events+1

MORGAN STANLEY 8-K Report, Rights Modification (Mar 19, 2015)

Filed March 19, 2015For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley (MS) filed an 8-K on March 18, 2015, to report the establishment and issuance of its Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series J. This new class of preferred stock has a liquidation preference of $25,000 per share and is being offered through depositary shares. The filing details the Certificate of Designation, which outlines the terms and conditions of this Series J Preferred Stock. Crucially for investors, the issuance of the Series J Preferred Stock introduces restrictions on Morgan Stanley's ability to declare or pay dividends, or repurchase its "junior stock" (which includes common stock). These restrictions are triggered if the company fails to declare and pay full dividends on the Series J Preferred Stock. This means that common stockholders could see dividend payments or share repurchases delayed or halted if the company prioritizes payments to the new preferred stockholders.

Key Highlights

  • 1Morgan Stanley established and issued its Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series J.
  • 2The Series J Preferred Stock has a liquidation preference of $25,000 per share.
  • 3Depositary shares representing interests in the Series J Preferred Stock are being offered.
  • 4The issuance of Series J Preferred Stock creates restrictions on dividends and repurchases of junior stock, including common stock.
  • 5These restrictions are contingent on the full declaration and payment of dividends on the Series J Preferred Stock.
  • 6The Certificate of Designation for the Series J Preferred Stock has been filed with Delaware.
  • 7The filing includes various exhibits related to the Series J Preferred Stock, its depositary shares, and legal opinions.

Frequently Asked Questions

The most significant impact for common stockholders is that the company's ability to pay dividends or repurchase common stock is restricted if it fails to pay full dividends on the Series J Preferred Stock. This could lead to delays or halts in distributions to common shareholders.

'Junior stock' refers to any class or series of Morgan Stanley's capital stock that ranks below the Series J Preferred Stock in terms of dividend payments and asset distribution upon liquidation. This explicitly includes Morgan Stanley's common stock.

No, this filing is not about a new common stock offering. It concerns the creation and issuance of a new class of preferred stock, Series J, and depositary shares representing interests in that preferred stock.

The Series J Preferred Stock is described as Fixed-to-Floating Rate Non-Cumulative Preferred Stock with a liquidation preference of $25,000 per share. Specific details regarding its dividend rate and floating rate conversion are found in the Certificate of Designation filed as an exhibit.