8-KMaterial AgreementsShareholder MattersCorporate Changes+1

Public Storage 8-K Report, Material Agreement (Apr 8, 2010)

Filed April 8, 2010For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) filed an 8-K report on April 8, 2010, detailing the issuance of new preferred shares. Specifically, the company entered into an Underwriting Agreement to sell 5,600,000 depositary shares, each representing a 1/1,000 interest in its 6.875% Cumulative Preferred Shares, Series O. An over-allotment option for an additional 840,000 depositary shares was also granted to the underwriters. This issuance of preferred stock will impose certain restrictions on the company's ability to make distributions or redeem other junior or parity securities if distributions on the Series O preferred shares are not declared. The filing also includes the associated Articles Supplementary and an opinion on the legality of the issued securities. This action indicates Public Storage's strategy to raise capital through the issuance of preferred equity.

Key Highlights

  • 1Public Storage entered into an Underwriting Agreement to sell 5,600,000 depositary shares.
  • 2Each depositary share represents 1/1,000 of a 6.875% Cumulative Preferred Share of beneficial interest, Series O.
  • 3An over-allotment option for up to 840,000 additional depositary shares was granted to underwriters.
  • 4The issuance of Series O preferred shares introduces restrictions on distributions or redemptions of junior or parity securities if preferred dividends are not paid.
  • 5The company filed Articles Supplementary designating these 6,440 shares of preferred stock (equivalent to the 5.6 million depositary shares).
  • 6The filing includes key exhibits such as the Underwriting Agreement, Articles Supplementary, and a legal opinion on the securities.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report Public Storage's entry into a material definitive agreement, specifically an Underwriting Agreement for the sale of new preferred shares. It also details amendments to the company's charter to designate these preferred shares.

The company is issuing 6.875% Cumulative Preferred Shares, Series O. These are being offered as depositary shares, with each depositary share representing a 1/1,000 interest in a preferred share. The Series O preferred shares have a fixed dividend rate of 6.875% and carry certain distribution restrictions on other securities if their dividends are not paid.

The filing details the sale of 5,600,000 depositary shares, plus an option for up to 840,000 additional shares. While the exact price per share is not disclosed in this 8-K, the offering size indicates a significant capital raise, intended to be completed through the underwriters.

The issuance of new preferred shares may impact existing shareholders through dilution if the company issues a large number of shares relative to its outstanding common equity. More directly, the terms of the Series O preferred shares include restrictions that could limit the company's ability to pay distributions on other securities, including common shares, if preferred dividends are not met.