8-KShareholder MattersCorporate ChangesOther Events+1

SCHWAB CHARLES CORP 8-K Report, Rights Modification (Mar 30, 2021)

Filed March 30, 2021For Securities:SCHWSCHW-PDSCHW-PJ

Summary

This 8-K filing by The Charles Schwab Corporation (SCHW) on March 30, 2021, primarily details the issuance of new preferred stock and the subsequent redemption of existing preferred stock. The company has established the terms and voting rights for its 4.450% Non-Cumulative Perpetual Preferred Stock, Series J, through a Certificate of Designations. This new Series J Preferred Stock is being issued via Depositary Shares, representing a fractional ownership in the Series J Preferred Stock. The most significant action for investors is Schwab's intent to use the net proceeds from this new preferred stock issuance to redeem all outstanding shares of its Series C Preferred Stock and corresponding depositary shares. The redemption is planned for June 1, 2021, with notice expected in April 2021. This strategic move allows Schwab to potentially refinance its capital structure and take advantage of current market conditions.

Key Highlights

  • 1Establishment of Series J Preferred Stock: Schwab has filed a Certificate of Designations to define the terms, rights, and preferences of its new 4.450% Non-Cumulative Perpetual Preferred Stock, Series J.
  • 2Depositary Shares Issuance: The company is issuing 24,000,000 Depositary Shares, each representing a 1/40th ownership interest in a share of Series J Preferred Stock.
  • 3Redemption of Series C Preferred Stock: Net proceeds from the Series J Preferred Stock issuance will be used to fully redeem all outstanding Series C Preferred Stock and its associated depositary shares.
  • 4Planned Redemption Date: The redemption of Series C Preferred Stock is scheduled for June 1, 2021, with notice expected to be given in April 2021.
  • 5Underwriting Agreement: A Preferred Underwriting Agreement was entered into with several underwriters, including BofA Securities, Credit Suisse, J.P. Morgan, Morgan Stanley, and Wells Fargo, for the sale of the Depositary Shares.
  • 6Restrictions on Common Stock Dividends: The terms of the Series J Preferred Stock include restrictions on Schwab's ability to pay dividends on, or repurchase, its common or junior preferred stock if it fails to pay dividends on the Series J Preferred Stock.

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