LANSING, Mich. and PHOENIX, Jan. 4,
2011 /PRNewswire/ -- Capitol Bancorp Limited ("Capitol")
(NYSE: CBC) announced today the commencement of an offer to
exchange (the "Exchange Offer") shares of its common stock, no par
value per share, for any and all of its outstanding trust preferred
securities (the "Trust Preferred Securities") issued by Capitol
Trust I, Capitol Trust II, Capitol Trust III, Capitol Trust 4
(a/k/a Trust IV), Capitol Trust VI, Capitol Trust VII, Capitol
Trust VIII, Capitol Trust IX, Capitol Trust X, Capitol Trust XI and
Capitol Trust XII, which are statutory trusts formed under the laws
of the State of Delaware (the
"Capitol Trusts"). The offer commenced on January 3, 2011.
For each $10.00 liquidation amount
of the Trust Preferred Securities of Capitol Trust I or Capitol
Trust XII that Capitol accepts in the Exchange Offer, Capitol will
issue 10 shares of its common stock. For each $1,000 liquidation amount of the Trust Preferred
Securities of Capitol Trusts II-XI accepted in the Exchange Offer,
Capitol will issue 1,000 shares of its common stock. No
accrued and unpaid interest owed by Capitol with respect to the
Trust Preferred Securities will be paid to holders who tender any
Trust Preferred Securities in the Exchange Offer.
The following Trust Preferred Securities, which constitute all
of Capitol Bancorp's outstanding Trust Preferred Securities as of
September 30, 2010, are subject to
the Exchange Offer:
|
|
Approximate Liquidation
Amount
|
|
|
Capitol Trust I (NYSE:
CBC-PA):
|
$25.3 million
|
|
|
Capitol Trust II (non-publicly
held):
|
$10 million
|
|
|
Capitol Trust III (non-publicly
held):
|
$15 million
|
|
|
Capitol Trust 4 (non-publicly
held):
|
$3 million
|
|
|
Capitol Trust VI (non-publicly
held):
|
$10 million
|
|
|
Capitol Trust VII (non-publicly
held):
|
$10 million
|
|
|
Capitol Trust VIII (non-publicly
held):
|
$20 million
|
|
|
Capitol Trust IX (non-publicly
held):
|
$10 million
|
|
|
Capitol Bancorp Trust X
(non-publicly held):
|
$33 million
|
|
|
Capitol Trust XI (non-publicly
held):
|
$20 million
|
|
|
Capitol Trust XII (NYSE:
CBC-PB):
|
$14.5 million
|
|
|
|
|
Capitol's obligation to exchange common stock for Trust
Preferred Securities in the Exchange Offer is subject to a number
of conditions that must be satisfied or waived by Capitol,
including, among others, that (i) that the holders of Capitol's
common stock must approve a proposal to amend Capitol's articles of
incorporation to increase the number of authorized shares of
Capitol's common stock from 50,000,000 to 1,500,000,000 at a
special meeting of shareholders to be held on January 31, 2011
(or any adjournments or postponements thereof); (ii) holders of
Capitol's common stock must approve the Exchange Offer at the
special meeting of shareholders of Capitol (or any adjournments or
postponements thereof) in accordance with Section 312.03 of the New
York Stock Exchange Listed Company Manual; (iii) holders of the
Trust Preferred Securities of Capitol Trust I and Capitol Trust XII
must approve the proposals to approve the amendments to certain
provisions of the Indentures and Guarantee Agreements issued in
connection with Capitol Trust I and Capitol Trust XII; and (iv)
there has been no change or development that in its reasonable
judgment may materially reduce the anticipated benefits to Capitol
of the Exchange Offer or that has had, or could reasonably be
expected to have, a material adverse effect on the Corporation, its
businesses, condition (financial or otherwise) or prospects.
If the conditions set forth in (i) and (ii) above are not met,
Capitol may proceed with the Exchange Offers subject to a
limitation of 19.9% of new shares of common stock. If the
proposal to increase Capitol's authorized shares or the Exchange
Proposal are not approved at the special meeting of Capitol's
shareholders, depending on the aggregate liquidation amount of
Trust Preferred Securities tendered in the Exchange Offer, Capitol
may be required to prorate the Trust Preferred Securities that it
accepts in this Exchange Offer to remain within this limit. Any
Trust Preferred Securities not accepted for exchange as a result of
proration will be returned to tendering holders promptly after the
expiration date.
The Exchange Offer is one component of the capital initiatives
announced December 23, 2010 by
Capitol, which are designed to augment its existing strategic
initiatives focused primarily on affiliate divestitures,
operational cost savings, balance sheet deleveraging and
system-wide liquidity. The Exchange Offer represents an
efficient opportunity to strengthen the composition of Capitol's
capital base by increasing its Tier 1 common and tangible common
equity ratios, while also reducing the dividend and interest
expense associated with the debt securities. By increasing its
common equity component, Capitol expects to have increased capital
flexibility to take advantage of market opportunities and implement
its long-term strategies.
When the Trust Preferred Securities were originally issued, and
until recently, substantially all of those securities comprised a
crucial element of Capitol Bancorp's compliance with regulatory
capital requirements because they were a material component of
regulatory capital. Because of Capitol Bancorp's weakened
financial condition and recent changes affecting its ability (as
well as that of other bank holding companies in the United States) to include any portion of
its Trust Preferred Securities in regulatory capital computations,
a small portion of its Trust Preferred Securities are included in
the Corporation's current regulatory capital measurements and will
cease to be includable in the future.
Currently, interest payments on all of Capitol Bancorp's Trust
Preferred Securities are in a deferral period, which commenced in
mid-2009 as a component of the Corporation's efforts to conserve
cash resources. In addition, Capitol Bancorp is prohibited
from making any interest payments on the Trust Preferred Securities
without prior regulatory approval. By increasing its common
equity foundation through the Trust Preferred Securities exchange
offer and other contemplated components of its capital strategy,
which are described herein, Capitol Bancorp expects flexibility to
prospectively pursue market opportunities and implement longer-term
operating strategies that can be pursued at the appropriate time,
subject to approval of the Trust Preferred Securities exchange
offer and the other matters discussed in this announcement.
The complete terms and conditions of the Exchange Offer are set
forth in the Offering Memorandum and Letter of Transmittal for the
Exchange Offer (the "Exchange Offer Documents"), which are being
sent separately to holders of the Trust Preferred Securities. The
description of the Exchange Offer in this press release is only a
summary and is qualified in its entirety by reference to the
relevant Exchange Offer Documents. Holders are urged to read the
Exchange Offer Documents for the relevant Exchange Offer carefully.
Holders may obtain the relevant Exchange Offer Documents by
contacting Capitol.
The Exchange Offer will expire at 11:59
p.m., Lansing, Michigan
time on January 31, 2011, unless
extended or terminated early.
Honigman Miller Schwartz and Cohn
LLP has provided Capitol with legal advice in connection with the
Exchange Offer.
The Exchange Offer is being made in reliance upon the exemption
from the registration requirements of the Securities Act of 1933,
as amended (the "Securities Act"), provided by Section 3(a)(9)
of the Securities Act. This press release is for informational
purposes only and neither an offer to purchase nor a solicitation
to buy any of the Trust Preferred Securities issued by the Capitol
Trusts, nor is it a solicitation for acceptance of the Exchange
Offer. Capitol is making the Exchange Offer only by, and pursuant
to the terms of, the relevant Exchange Offer Documents. The
Exchange Offer is not being made in any jurisdiction in which the
making or acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. None of
Capitol, its financial or legal advisors, the trustees of the
Capitol Trusts, the exchange agent or any of their respective
affiliates is making any recommendation as to whether holders
should tender their Trust Preferred Securities in connection with
the Exchange Offer.
This press release contains forward-looking statements,
including statements about Capitol's financial condition, results
of operations, long-term growth strategies, and the completion and
effect of the Exchange Offer. These statements are not historical
facts but instead represent only Capitol's current beliefs
regarding future events, many of which, by their nature, are
inherently uncertain and outside of Capitol's control. Capitol's
actual results and financial condition, as well as the effect of
the Exchange Offer, may differ, possibly materially, from those
indicated in these forward-looking statements. For a discussion of
the factors that could cause actual results to differ materially
from those described in the forward-looking statements, consult
Capitol's Annual Report on Form 10-K for the year ended
December 31, 2009, and subsequent filings with the Securities
and Exchange Commission available on the Securities and Exchange
Commission's website (www.sec.gov), as well as the Exchange Offer
Documents for the Exchange Offer.
About Capitol Bancorp Limited
Capitol Bancorp Limited (NYSE: CBC) is a $4.2 billion national community bank development
company, with a network of banks in 14 states. Founded in
1988, Capitol Bancorp Limited has executive offices in Lansing, Michigan, and Phoenix, Arizona.
SOURCE Capitol Bancorp Limited