8-KOther Events

US BANCORP \DE\ 8-K Report (Oct 31, 2001)

Filed October 31, 2001For Securities:USBUSB-PHUSB-PPUSB-PRUSB-PQUSB-PSUSB-PA

Summary

This 8-K filing by U.S. Bancorp (USB) on October 31, 2001, announces the company's involvement in a significant public offering through a newly formed business trust, USB Capital IV. The core of the announcement is the underwriting agreement for the public offering of $500 million in Trust Preferred Securities, which carry a 7.35% interest rate and are due in 2031. These securities represent preferred beneficial interests in the Trust and are backed by a full, irrevocable, and unconditional subordinated guarantee from U.S. Bancorp. The proceeds from this offering, along with the sale of the Trust's common securities, will be used by the Trust to purchase 7.35% Junior Subordinated Debentures issued by U.S. Bancorp. This structure effectively allows U.S. Bancorp to raise substantial capital through a hybrid security offering, enhancing its capital base. Investors in the Capital Securities are essentially gaining exposure to U.S. Bancorp's creditworthiness through a guaranteed, subordinated debt instrument, with the debentures serving as the underlying investment for the Trust.

Key Highlights

  • 1U.S. Bancorp is facilitating a $500 million public offering of Trust Preferred Securities through a special purpose entity, USB Capital IV.
  • 2The Trust Preferred Securities will bear an interest rate of 7.35% and have a maturity date of November 1, 2031.
  • 3U.S. Bancorp is providing a full, irrevocable, and unconditional subordinated guarantee for these securities.
  • 4The proceeds from the offering will be used by the Trust to purchase 7.35% Junior Subordinated Debentures issued by U.S. Bancorp.
  • 5The transaction is structured to enhance U.S. Bancorp's capital base by raising long-term debt.
  • 6The securities and related agreements have been registered under the Securities Act of 1933.
  • 7Key agreements include the Underwriting Agreement, Guarantee Agreement, and the Junior Subordinated Indenture.

Frequently Asked Questions

This filing announces U.S. Bancorp's participation in a public offering of $500 million of Trust Preferred Securities through a trust called USB Capital IV. This is a method for the company to raise capital by issuing debt that is guaranteed by the company.

Trust Preferred Securities are hybrid securities with characteristics of both debt and equity. In this case, the Trust Preferred Securities issued by USB Capital IV are backed by a subordinated guarantee from U.S. Bancorp. The proceeds from selling these securities are used to buy subordinated debentures from U.S. Bancorp itself, effectively channeling funds to the company while offering investors a guaranteed return.

This offering allows U.S. Bancorp to raise $500 million in long-term capital. The 7.35% interest rate on the junior subordinated debentures indicates the cost of this capital. This capital infusion would generally strengthen the company's balance sheet and capital ratios, which is beneficial for financial institutions.

The underwriters for this public offering are Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., and U.S. Bancorp Piper Jaffray Inc., acting as representatives of the underwriters.