FBP $4.50 on raising capital:
First BanCorp raises enough capital to end bailout
First BanCorp completes capital-raise plan with $175.5M from Oaktree; bailout exit imminent
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The Associated Press, On Tuesday June 28, 2011, 11:26 am
First BanCorp will raise $175.5 million from Oaktree Capital Management LP, the final sum needed to end the Treasury Department's part-ownership and return the company to private hands, First BanCorp said Tuesday.
Investors viewed the investment as a sign of confidence in the bank. Shares surged by 14 percent in morning trading Tuesday.
First BanCorp, based in Puerto Rico, said two funds managed by Oaktree will pay $3.50 for each share -- a 3-percent discount below Monday's closing price of $3.62.
The deal is part of a plan to raise money so that First BanCorp can end its part-ownership by the U.S. Treasury. First BanCorp has drawn investments of about $515 million from private investors. If shareholders approve the plan, the Treasury Department will convert its $424.2 million of preferred stock into common shares. Once Treasury sells those shares, First BanCorp will be a private company again.
Treasury obtained its stake in First BanCorp in January 2009, as part of a capital-boosting program aimed at healthy banks. First BanCorp received $424.2 million to help it ride out the financial crisis.
Since then, banks such as First BanCorp have struggled under the weight of souring loans for commercial real estate and land development. First BanCorp was hit especially hard because of the severe real-estate busts in Puerto Rico and Florida.
After Treasury's shares are converted, Oaktree's investment will represent 24.9 percent of First BanCorp's outstanding shares, the company said.
The deal follows a similar investment last month by private-equity fund Thomas H. Lee Partners, based in Boston. THL also took a potential 24.9 percent ownership stake of the company by buying about $180 million in common stock.
The bank holding company also has investment agreements with other institutional investors and private-equity firms to sell about $164 million of common shares. It says the investments total $515 million.
Under their agreements with First BanCorp, Oaktree, based in Los Angeles, and THL each can appoint someone to the company's board of directors.
First BanCorp is the parent corporation of FirstBank Puerto Rico. FirstBank has 160 branches, stand-alone offices and in-branch service centers throughout Puerto Rico, the U.S. and British Virgin Islands and Florida. It owns a loan company, a broker-dealer, and a mortgage lender.
First BanCorp's shares leaped 52 cents, or 14 percent, to $4.14 on Tuesday. The stock has traded between $3.60 and $13.80 over the past 52 weeks.
