Summary
This 8-K filing from BB&T Corporation (now Truist Financial Corp.) on August 24, 2005, details the company's entry into material definitive agreements related to the issuance and sale of $500 million of 5.85% Capital Securities by BB&T Capital Trust I. The Trust, in turn, used these proceeds to purchase junior subordinated debentures from BB&T. This structure is a form of securitization, often used by financial institutions to raise capital and manage their balance sheets. The debentures carry a 5.85% interest rate, payable semi-annually, with the company having the option to defer payments for up to ten semi-annual periods. These debentures mature in 2035 but are redeemable earlier under certain conditions.
Key Highlights
- 1BB&T Corporation entered into agreements for the issuance of $500 million in 5.85% Capital Securities through a trust (BB&T Capital Trust I).
- 2The Trust used the proceeds from the Capital Securities offering to purchase $515,464,000 in junior subordinated debentures from BB&T.
- 3The junior subordinated debentures bear an annual interest rate of 5.85%, payable semi-annually.
- 4BB&T has the option to defer interest payments on the debentures for up to ten consecutive semi-annual periods.
- 5The debentures have a maturity date of August 18, 2035, with the possibility of early redemption by BB&T.
- 6A Guarantee Agreement was put in place, where BB&T guarantees payments on the Capital Securities to the extent the Trust has funds available, but not if the Trust lacks sufficient funds.
- 7This transaction represents a method for BB&T to raise capital through a securitization structure.