Summary
The Charles Schwab Corporation (SCHW) filed an 8-K on April 30, 2020, detailing the issuance and sale of 2,500,000 depositary shares representing perpetual preferred stock. These shares, designated as Series G, carry a 5.375% fixed-rate reset coupon and were sold at $1,000 per depositary share, raising approximately $2.47 billion in net proceeds after underwriting discounts and expenses. This offering was conducted under an effective registration statement and prospectus supplement. The issuance of Series G Preferred Stock introduces specific dividend and distribution restrictions. The Company's ability to pay dividends on, make distributions with respect to, or repurchase/redeem its common stock or junior preferred stock is subject to the condition that dividends on the Series G Preferred Stock for the preceding dividend period have been declared and paid or set aside for payment. This filing also includes the Certificate of Designations, the Underwriting Agreement, and the Deposit Agreement, all crucial documents for understanding the terms and implications of this new preferred stock issuance.
Key Highlights
- 1Charles Schwab Corporation issued 2,500,000 depositary shares of Series G Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock.
- 2Each depositary share represents a 1/100th ownership interest in a share of Series G Preferred Stock with a liquidation preference of $100,000 per share (or $1,000 per depositary share).
- 3The Series G Preferred Stock carries a fixed dividend rate of 5.375% per annum.
- 4The offering generated net proceeds of approximately $2.47 billion after deducting underwriting discounts and estimated offering expenses.
- 5The issuance introduces dividend restrictions: if dividends on Series G Preferred Stock are not declared and paid, the Company faces limitations on paying dividends or repurchasing its common stock or junior preferred stock.
- 6The transaction was completed under an existing registration statement and involved a standard underwriting agreement with several prominent financial institutions.
- 7The Certificate of Designations, establishing the terms of the Series G Preferred Stock, was filed with the Delaware Secretary of State.