8-KShareholder MattersCorporate ChangesOther Events+1

SCHWAB CHARLES CORP 8-K Report, Rights Modification (Oct 31, 2016)

Filed October 31, 2016For Securities:SCHWSCHW-PDSCHW-PJ

Summary

The Charles Schwab Corporation filed an 8-K report on October 31, 2016, to announce the issuance and sale of 600,000 depositary shares. These shares represent a 1/100th ownership interest in a new series of preferred stock, designated as 4.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series E. The offering generated approximately $591 million in net proceeds after deducting underwriting discounts and expenses. This move signifies a capital raise for the company, likely to bolster its financial position or fund strategic initiatives. The new Series E Preferred Stock has specific terms regarding dividends and potential restrictions on common stock distributions. Importantly, the company's ability to pay dividends on, or repurchase, parity or junior preferred stock, or common stock, is subject to the declaration and payment of dividends on the Series E Preferred Stock. This structure is typical for preferred stock offerings designed to enhance regulatory capital or provide flexibility in financial management.

Key Highlights

  • 1The Charles Schwab Corporation issued 600,000 depositary shares representing Series E Preferred Stock.
  • 2The Series E Preferred Stock carries a fixed-to-floating rate of 4.625% and is perpetual and non-cumulative.
  • 3The offering generated net proceeds of approximately $591 million.
  • 4The issuance was conducted under an Underwriting Agreement with several prominent financial institutions.
  • 5The terms of the Series E Preferred Stock impose potential restrictions on dividends and repurchases of junior or parity securities if dividends on Series E are not paid.
  • 6The filing includes key exhibits such as the Underwriting Agreement, Certificate of Designations, and Deposit Agreement.

Frequently Asked Questions

This 8-K filing announces the successful issuance and sale of a new series of preferred stock (Series E) through depositary shares, detailing the terms of the offering and the capital raised.

The company raised approximately $591 million in net proceeds from the offering after accounting for underwriting discounts and estimated expenses.

The Series E Preferred Stock is a perpetual, non-cumulative stock with a dividend rate that starts at 4.625% fixed and converts to a floating rate. It represents a liquidation preference of $100,000 per share ($1,000 per depositary share).

Yes, the terms of the Series E Preferred Stock include restrictions. If dividends on the Series E Preferred Stock are not declared and paid for a dividend period, the company's ability to pay dividends on or repurchase its common stock or parity/junior preferred stock may be restricted.