New Information re: TARP and a previously announced Capital raising effort/plan.
Community Financial Shares, Inc. Announces Private Placement Stock Offering
November 13, 2012 08:49 PM Eastern Daylight Time
GLEN ELLYN, Ill.--(BUSINESS WIRE)--Community Financial Shares, Inc., (the “Company”) (PINK: CFIS), the parent company of Community Bank-Wheaton/Glen Ellyn (the “Bank”), announced today that it has entered into a securities purchase agreement with certain accredited investors and members of the Company’s Board of Directors and executive management team whereby the Company will initially issue an aggregate of $24.0 million of convertible preferred stock and common stock (the “Initial Offering”). The preferred stock will be convertible into shares of common stock at a conversion price of $1.00 per share, and the common stock will be sold at a per share price of $1.00.
Following the completion of the Initial Offering, the Company will conduct a rights offering to permit the Company’s current stockholders to participate in the transaction at the same price as the new investors. The rights offering will offer current stockholders the opportunity to purchase up to $3.0 million of common stock at a price of $1.00 per share. Following the rights offering, certain of the Initial Offering’s investors will have the option of purchasing a maximum of approximately $2.4 million worth of additional shares of preferred stock in order to preserve their percentage ownership interest in the Company’s outstanding shares as of the Initial Offering.
“We are pleased to be able to announce this capital raise and the confidence it demonstrates in our community and our organization by the investors participating in the offering,” said Scott W. Hamer, the President and Chief Executive Officer of the Company. “This capital raise represents an important step forward, further strengthening our capacity to serve the needs of individuals and businesses in our markets.”
The proceeds of the Initial Offering will be used to redeem the Company’s outstanding $6.9 million of preferred stock previously issued to the U.S. Department of Treasury pursuant to the TARP Capital Purchase Program (the “TARP Securities”). The Company has entered into an agreement with the Treasury Department pursuant to which, subject to the completion of the Initial Offering and the receipt of Federal Reserve Board approval, the Company will repurchase the TARP Securities for approximately 45% of the their total par value, and any accrued and unpaid dividends thereon. Proceeds from the Initial Offering will also be used (i) to repay the Company’s indebtedness to a third party lender, (ii) to enhance the Bank’s capital to levels that satisfy the requirements of its consent order with the FDIC and the Illinois Department of Financial and Professional Regulation, and to (iii) support the future operational growth of the Company.
“This private placement, when completed, will not only permit us to satisfy the capital requirements of our regulatory order, but will provide the Company and the Bank with capital to take advantage of growth opportunities within our market area and contiguous markets,” said Scott W. Hamer, President and Chief Executive Officer. As part of the private placement, three of the investors participating in the Initial Offering will each appoint a representative to serve on the Board of Directors. In addition, Donald H. Fischer has informed the Company that he will retire as the Chairman of the Company’s Board of Directors effective as of the closing of the Initial Offering. Subject to regulatory approval, Mr. Fischer’s successor will be Donald H. Wilson. Mr. Wilson is currently the Chairman and Chief Executive Officer of Stone Pillar Advisors, Ltd., a financial services strategic consulting firm, and has more than 25 years of experience in the banking industry. Mr. Wilson began his career at the Federal Reserve Bank of Chicago, serving in the bank examination and economic research divisions, and has subsequently held numerous executive management positions at several large financial institutions and financial services companies.
“Our Board of Directors is fully supportive of the transaction and strongly believes that this transaction is in the best interest of our stockholders and customers,” said Mr. Fischer. “We are also pleased to be able to offer our current stockholders the opportunity to participate in the Company’s capital raise through the rights offering at the same per share price that our new investors are paying for their interest in the Company. We are also pleased to strengthen our Board with the energy, experience and vision that Mr. Wilson and the three additional investor Board appointees will bring to the Company. Our Board and management team will work tirelessly with our advisors to bring this recapitalization effort to a conclusion.”
Terms of the Private Placement Offering
Pursuant to the terms of the securities purchase agreement, the Company will issue 4,315,300 shares of common stock, 133,411 shares of newly-created Series C preferred stock, 56,708 shares of newly-created Series D preferred stock and 6,728 shares of newly-created Series E preferred stock to investors in the Initial Offering. The shares of common stock will be sold at a price of $1.00 per share and the shares of Series C preferred stock, Series D preferred stock and Series E preferred stock will each be sold at a price of $100.00 per share. Each share of Series C preferred stock will be convertible, at the sole discretion of the holder of such shares, into 100 shares of Company common stock (based on a conversion price of $1.00 per share) and will be entitled to vote on an as-converted basis on any matter presented to the Company’s common stockholders.
The Series D preferred stock and Series E preferred stock will not have voting rights and will be convertible, at the sole discretion of the holder of such shares, into shares of Series C preferred stock, provided that no such conversion results in an investor holding more than a 9.99% or 4.99% voting ownership interest, respectively, in the Company, excluding for the purposes of this calculation any reduction in ownership resulting from transfers by such person of voting securities of the Company. The holders of the Series C preferred stock, Series D preferred stock and Series E preferred stock will be entitled to a liquidation preference equal to the purchase price of the shares in the event of any liquidation, dissolution or change in control of the Company.
An affiliate of Clinton Group, Inc. (“Clinton”) and certain institutional investors advised by the same investment advisor (the “Lead Institutional Purchasers”) will serve as lead purchasers in connection with the Initial Offering. Clinton will invest approximately $6.3 million and the Lead Institutional Purchasers will collectively invest approximately $2.5 million in the Initial Offering. Following the consummation of the Initial Offering, Clinton will hold a 9.9% voting interest in the Company, the Lead Institutional Purchasers will collectively hold a 9.9% voting interest in the Company, and one additional non-lead purchaser, Fullerton Capital Partners, LP, will hold a 9.9% voting interest in the Company. Each of these purchasers will have the option to purchase additional shares of preferred stock so that they may retain those voting ownership interests after the completion of the Rights Offering.
Upon consummation of the Initial Offering, the size of the Company’s and Bank’s Board of Directors will be fixed at nine members and, subject to the receipt of all required regulatory approvals, three of the investors participating in the offering will each appoint a representative to serve on the Board of Directors, and Donald H. Wilson will be appointed as Chairman of the Board.
The consummation of the private placement offering is subject to certain closing conditions set forth in the securities purchase agreement, including, but not limited to, the receipt of required regulatory and stockholder approvals. The Company currently anticipates that the transaction will be consummated in the fourth quarter of 2012.
FIG Partners LLC served as placement agent to the Company in connection with the private placement offering.
The Company plans to promptly file with the U.S. Securities and Exchange Commission and mail to its stockholders a written consent solicitation statement in connection with certain amendments to the Company’s certificate of incorporation that must be approved by stockholders in order to consummate the private placement offering. The Company and its respective directors and executive officers may be deemed to be participants in the solicitation of stockholder consents. Information regarding our directors and executive officers is contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, which was filed with the U.S. Securities and Exchange Commission on June 22, 2012. The written consent solicitation statement will contain important information about the Company and related matters, including the current security holdings of the Company’s respective officers and directors. Stockholders are urged to read the written consent solicitation statement carefully when it becomes available.
The written materials described above and other documents filed by the Company with the SEC will be available free of charge from the U.S. Securities and Exchange Commission’s website at www.sec.gov.
http://www.businesswire.com/news/home/20121113007526/en/Community-Financial-Shares-Announces-Private-Placement-Stock
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