Four Oaks Bank & Trust (fka FOFN)

[56Chevy]

No worries free bee

Sometimes they're called a Backstop Purchaser too.

Warren Buffett (actually BRK.A) was the backstop investor for USG.

http://www.investopedia.com/terms/b/backstop_purchaser.asp

[free_bee]

I meant PPS going down (chose the wrong word)...backstop investor is my new google alert..lol

[56Chevy]

"Crash"? No.

Go down in pps? Sure. But that's to be expected and the people buying this know full well that the pps will fall once the offering gets underway.

The trading activity since the announcement of the rights offering may cause some head scratching but ever since the announcement was made this has been what I would call a picture perfect lead up to a highly successful rights offering.

What does this rights offering have that many others don't? A backstop investor. And I think that's why we've seen superb investor interest.

Investors aren't here to flip the stock...these are tight hands buying this and they're very determined to get as many rights to buy more @ $1 as possible.

Marker:
Four Oaks Fincorp, I (FOFN)
$2.73 down -0.02 (-0.73%)
Volume: 14,660

*stock hit a high of $3 earlier in the session.

[free_bee]

Stock price is going up and up...but don't you think it will crash soon? When the offerings are over?

[Enterprising Investor]

Kenneth R Lehman owns 9.9 percent (3/27/14)

Controls 875,000 shares.

All shares of Common Stock beneficially owned by the Reporting Person were acquired from the Company on March 26, 2014, for $1.00 per share.

http://www.sec.gov/Archives/edgar/data/1040799/000094337414000222/form13d-032814.htm

[vpagano]

Let me check my math on this one:

Current equity = $21.63 MM = $2.71 per share

New equity = (current equity + proceeds) / (old s/o + new s/o)
= (21.63 + (26.56*1.00)) / (7.98 + 26.56)
= 48.19 / 34.53 = $1.40 per share

Current mkt. value = $2.14 per share

All in cost = $2.14 + (3* 1.00) = $5.14 / 4 = $1.29 per share

Current cost (%BV) = 1.29 / 1.40 = 92% of BV

Looks like all else equal, buying a share here and fully exercising your rights (not counting over allotment), an investor is recapitalizing the bank with a full cost of 92% of BV (before fees).

[56Chevy]

FORM S-1 REGISTRATION STATEMENT

FOUR OAKS FINCORP, INC.

Common Stock Underlying Subscription Rights to Purchase up to 26,557,977 Shares of Common Stock

We are distributing, at no charge, to holders of our common stock, par value $1.00 per share, non-transferable subscription rights to purchase up to an aggregate of 26,557,977 shares of our common stock, which we refer to as the rights offering. You will receive one subscription right for each share of common stock you own as of 5:00 p.m., Eastern Time, on [?], 2014. Each subscription right will entitle you, as a holder of our common stock, to purchase three shares of common stock at a subscription price of $1.00 per share, which we refer to as the basic subscription privilege.

If you fully exercise your basic subscription privilege, you will not experience any dilution in the percentage of our outstanding shares of common stock that you own immediately after the completion of the offering. You may also subscribe for additional shares, which we refer to as the oversubscription privilege, for pro rata allocation in the event that not all available shares are purchased pursuant to the shareholders’ basic subscription privilege or by the standby investor (described below). However, the oversubscription privilege will only be offered for an aggregate number of shares that, when combined with the number of shares purchased pursuant to the shareholders’ basic subscription privilege and by the standby investor, does not exceed 24,000,000 shares. If we accept your subscription pursuant to your oversubscription privilege, then in all circumstances the percentage of our outstanding shares that you own immediately after the offering will be higher than it was before the offering. Purchases of shares pursuant to the rights offering are also subject to certain other limitations described in this prospectus.

Subscription rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on [?], 2014, unless we extend the rights offering period. You should carefully consider whether to exercise your subscription rights before the expiration of the rights offering. All exercises of subscription rights are irrevocable. Our board of directors makes no recommendation regarding your exercise of the subscription rights.

We reserve the right to amend or cancel the rights offering at any time. Registrar and Transfer Company, our subscription agent for the rights offering, will hold all funds it receives in an escrow account until completion of the rights offering. If we cancel the rights offering, all subscription funds will be returned promptly, without interest or penalty.

To facilitate the rights offering, we have entered into a securities purchase agreement, or the Securities Purchase Agreement, with Kenneth R. Lehman, a private investor, whom we refer to as the standby investor. The standby investor has agreed to purchase from us, and we have agreed to sell to him, for $1.00 per share, the lesser of (i) 10,000,000 shares of common stock, (ii) if the rights offering is completed, all shares of common stock not purchased by shareholders exercising their basic subscription privilege, and (iii) the maximum number of shares that he may purchase without causing an “ownership change” under Section 382(g) of the Internal Revenue Code of 1986, as amended, or the Code (based on all shares of common stock outstanding at the completion of the offering). In addition, the Securities Purchase Agreement provides the standby investor a right of first refusal to purchase an additional 6,000,000 shares subject to the limitations outlined in clauses (ii) and (iii) above. We refer to the issuance to the standby investor as the standby offering, and we refer to the rights offering and the standby offering together as the offering.

[....]

http://ih.advfn.com/p.php?pid=nmona&article=61734946

*I like the fact this offering has a backstop investor.

Marker:
Four Oaks Fincorp, I (FOFN)
$2.14 up 0.04 (1.90%)
Volume: 6,445

[56Chevy]

Four Oaks Fincorp, Inc. Announces Rights Offering

Date : 03/26/2014 @ 8:45AM
Source: Business Wire
Stock : Four Oaks Fincorp, Inc. (QB) (FOFN)
Quote : $2.14 0.04 (1.90%) @ 5:00PM

Four Oaks Fincorp, Inc. (OTCBB: FOFN) (the “Company”), the holding company for Four Oaks Bank & Trust Company (the “Bank”), today announced that the Company intends to conduct a rights offering of up to approximately $26.6 million (the “Rights Offering”).

In the Rights Offering, the Company will distribute, at no charge, non-transferable subscription rights to its shareholders as of a future record date. For each share of common stock, $1.00 par value per share (the “Common Stock”), held as of the record date, a shareholder will receive a non-transferable right to purchase three shares of Common Stock at a subscription price of $1.00 per share (the “Basic Subscription Privilege”). Shareholders who exercise their Basic Subscription Privilege in full will have the opportunity to subscribe for additional shares in the event that not all available shares are purchased pursuant to the Basic Subscription Privilege or by Kenneth R. Lehman pursuant to the Securities Purchase Agreement, dated March 24, 2014, subject to certain limitations.

Subject to review of the registration statement to be filed with the Securities and Exchange Commission, the Company intends to commence the Rights Offering during the second quarter of 2014.

http://ih.advfn.com/p.php?pid=nmona&article=61594939

*I missed this announcement by 9 days.

Marker: 4/4/2014
Four Oaks Fincorp, I (FOFN)
$2.14 up 0.04 (1.90%)
Volume: 6,445

[56Chevy]

Book value per share at December 31, 2013 was $2.71

http://ih.advfn.com/p.php?pid=nmona&article=61663391

MV today is: $2.10

Marker:
Four Oaks Fincorp, I (FOFN)
$2.10 down -0.04 (-1.87%)
Volume: 3,034

*I hold no shares of FOFN at this time.

[56Chevy]

Balance Sheet and Capital:

Total assets of $828.9 million at June 30, 2013 declined 4.23% from $865.5 million at December 31, 2012. Net cash, cash equivalents, and investments of $301.2 million at June 30, 2013 decreased 0.81% compared to $303.7 million at December 31, 2012. Gross loans of $489.2 million at June 30, 2013 decreased 1.7% from $497.9 million at December 31, 2012. Total deposits of $657.5 million at June 30, 2013 decreased 6.1% from $699.9 million at December 31, 2012. Total shareholders' equity was $22.3 million at June 30, 2013, a decrease of 1.8%from $22.7 million at December 31, 2012. Book value per share at June 30, 2013 was $2.80 as compared to $2.90 at December 31, 2012.

http://ih.advfn.com/p.php?pid=nmona&article=58900143

*MV as of 9/10/2013 was $1.35

[SaltyMutt]

Believe me joey, I like it too. And the more I think about it the more I like FOFN. Four Oaks probably won't zoom it's way to a high pps tomorrow or next week but the other side of the coin is they probably won't be crashing at the speed of light any time soon. Traders may not appreciate this bank but for investors, I believe they will like this banks slow but steady rise.

[BigCat]

Shhhhh I like this one Salty.

[SaltyMutt]

With over 800 million in assets FOFN is larger than most of the other banks I follow. They do have their share of problems but I certainly don't see their doors being slammed shut any time soon. Although I believe Four Oaks will do well, at this point I don't see them moving very fast. It is worth keeping on the radar.