8-KShareholder MattersCorporate ChangesOther Events+1

SCHWAB CHARLES CORP 8-K Report, Rights Modification (Jan 26, 2012)

Filed January 26, 2012For Securities:SCHWSCHW-PDSCHW-PJ

Summary

The Charles Schwab Corporation (SCHW) filed an 8-K on January 26, 2012, to report on the issuance of its Series A Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock. The company successfully sold 400,000 shares of this preferred stock, raising approximately $393.8 million in net proceeds after underwriting discounts and expenses. This offering was conducted under a previously established registration statement and prospectus. The filing details that the Certificate of Designations, which outlines the terms and rights of the Series A Preferred Stock, was filed with the Delaware Secretary of State on January 24, 2012, amending the company's charter. Importantly, the terms of this preferred stock impose restrictions on the company's ability to pay dividends on, repurchase, or redeem its common stock or junior preferred stock if dividends on the Series A Preferred Stock are not declared and paid or set aside for payment in the preceding dividend period.

Key Highlights

  • 1The Charles Schwab Corporation issued 400,000 shares of Series A Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock.
  • 2The net proceeds from the offering were approximately $393.8 million.
  • 3A Certificate of Designations establishing the terms of the Series A Preferred Stock was filed on January 24, 2012.
  • 4The issuance was made pursuant to an Underwriting Agreement with Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC.
  • 5Dividends on common stock and junior preferred stock are restricted if Series A Preferred dividends are not paid.
  • 6The offering was made under a registration statement on Form S-3.
  • 7The filing also includes legal opinions from Arnold & Porter LLP.

Frequently Asked Questions

This 8-K filing was made to report the completion of the issuance and sale of 400,000 shares of The Charles Schwab Corporation's Series A Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock and to provide details on the terms and agreements related to this offering.

The company raised approximately $393.8 million in net proceeds from the offering, after deducting underwriting discounts, commissions, and estimated offering expenses.

A significant restriction is that the company's ability to pay dividends on, or repurchase, its common stock or any preferred stock ranking junior to or on parity with the Series A Preferred Stock is subject to the condition that dividends on the Series A Preferred Stock have been declared and paid or set aside for payment for the immediately preceding dividend period.

The underwriters for this offering were Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC, acting as representatives for the several underwriters named in the Underwriting Agreement.