First BanCorp. (the “Corporation”) (NYSE: FBP), the bank holding company
for FirstBank Puerto Rico (“FirstBank” or “the Bank”), announced today
that it has commenced an offer to exchange (the “Exchange Offer”) up to
10,087,488 newly issued shares of its common stock, par value $0.10 per
share (“Common Stock”), for any and all of the issued and outstanding
shares of: (i) $11,254,875 in aggregate liquidation preference of its
7.125% Noncumulative Perpetual Monthly Income Preferred Stock, Series A
(CUSIP 318672201); (ii) $11,899,675 in aggregate liquidation preference
of its 8.35% Noncumulative Perpetual Monthly Income Preferred Stock,
Series B (CUSIP 318672300); (iii) $11,515,275 in aggregate liquidation
preference of its 7.40% Noncumulative Perpetual Monthly Income Preferred
Stock, Series C (CUSIP 318672409); (iv) $12,764,800 in aggregate
liquidation preference of its 7.25% Noncumulative Perpetual Monthly
Income Preferred Stock, Series D (CUSIP 318672508); and (v) $15,612,175
in aggregate liquidation preference of its 7.00% Noncumulative Perpetual
Monthly Income Preferred Stock, Series E (CUSIP 318672607)
(collectively, “Preferred Stock”).
The Exchange Offer will expire at 5:00 p.m., Eastern Standard Time, on
Monday, March 18, 2013 (the “Expiration Date”) unless extended or
earlier terminated by the Corporation. Holders of shares of Preferred
Stock must validly tender their shares for exchange in the Exchange
Offer on or prior to the Expiration Date to receive shares of Common
Stock. To participate in the Exchange Offer, tendering holders of
Preferred Stock must grant a proxy permitting the proxyholders to
execute a written consent in favor of an amendment to the certificate of
designation for the Preferred Stock, except if the holder is not a
holder of shares of Preferred Stock as of the record date. The Board of
Directors will set the record date for determining holders of Preferred
Stock entitled to grant their proxy as March 11, 2013, the date that is
five business days before the Expiration Date.
The Corporation will issue a number of shares of Common Stock in
exchange for each share of Preferred Stock accepted for exchange based
on an exchange value of $20 per share of Preferred Stock divided by the
higher of (1) the average Volume Weighted Average Price, or “VWAP,” of a
share of Common Stock, during the five trading-day period ending on the
second business day immediately preceding the Expiration Date of the
Exchange Offer and (2) $5 per share of Common Stock. No more than 4
shares of Common Stock will be issued in exchange for each share of
Preferred Stock that the Corporation accepts for tender in the Exchange
Offer. The price per share for purposes of determining the number of
shares of the Corporation’s Common Stock that will be issued for each
share of Preferred Stock accepted in the Exchange Offer (the “Relevant
Price”) will be fixed at 4:00 p.m., Eastern Standard Time, on the second
business day immediately preceding the Expiration Date of the Exchange
Offer and will be announced prior to 9:00 a.m., Eastern Standard Time,
on the immediately succeeding business day. Depending on the trading
price of the Common Stock compared to the Relevant Price, the market
value of the Common Stock on the date that it is issued in exchange for
each share of Preferred Stock that the Corporation accepts for exchange,
that is, the settlement date, may be less than or equal to or greater
than the applicable exchange value.
Sandler O’Neill + Partners, L.P. is acting as the sole dealer manager,
Computershare is acting as exchange agent and Georgeson Inc. is acting
as information agent for this transaction. For further details, please
contact Sandler O’Neill + Partners, L.P. at 866-805-4128 (toll-free) or
212-466-7807 (collect) or Georgeson Inc. at 866-856-6388 (toll-free) or
212-440-9800 (collect).
This press release is neither an offer to exchange nor a solicitation
of an offer to sell Common Stock or Preferred Stock. The Exchange
Offer is only being made pursuant to the Registration Statement, as
amended (including the preliminary prospectus, the letter of transmittal
and related offer documents), filed with the U.S. Securities and
Exchange Commission (the “SEC”) on February 14, 2013, which is available
without charge on the SEC’s website site at www.sec.gov
or can be obtained, without charge, upon written or oral request to:
First BanCorp, Attention: Lawrence Odell, Secretary, P.O. Box 9146,
San Juan, Puerto Rico, 00908-0146; telephone: (787) 729-8109.
Investors should read the preliminary prospectus in the Registration
Statement, and related offer documents, for more complete information
about the Corporation and the Exchange Offer. Neither the
Corporation, the dealer manager, the information agent, the exchange
agent nor any other person is making any recommendation as to whether or
not holders of the Preferred Stock should tender their shares of
Preferred Stock for exchange in the Exchange Offer.
About First BanCorp.
First BanCorp. is the parent corporation of FirstBank Puerto Rico, a
state-chartered commercial bank with operations in Puerto Rico, the
Virgin Islands and Florida, and of FirstBank Insurance Agency. First
BanCorp. and FirstBank Puerto Rico operate within U.S. banking laws and
regulations. The Corporation operates a total of 154 branches,
stand-alone offices, and in-branch service centers throughout Puerto
Rico, the U.S. and British Virgin Islands, and Florida. Among the
subsidiaries of FirstBank Puerto Rico are First Federal Finance Corp., a
small loan company; FirstBank Puerto Rico Securities Corp., a
broker-dealer subsidiary; First Management of Puerto Rico; and
FirstMortgage, Inc., a mortgage origination company. In the U.S. Virgin
Islands, FirstBank operates First Express, a small loan company. First
BanCorp’s common shares trade on the New York Stock Exchange under the
symbol FBP.
Safe Harbor
This press release may contain “forward-looking statements” concerning
the Corporation’s future economic performance. The words or phrases
“expect,” “anticipate,” “look forward,” “should,” “believes” and similar
expressions are meant to identify “forward-looking statements” within
the meaning of Section 27A of the Private Securities Litigation Reform
Act of 1995, and are subject to the safe harbor created by such section.
The Corporation wishes to caution readers not to place undue reliance on
any such “forward-looking statements,” which speak only as of the date
made, and to advise readers that various factors, including, but not
limited to, the following could cause actual results to differ
materially from those expressed in, or implied by such forward-looking
statements: uncertainty about whether the Corporation and FirstBank will
be able to fully comply with the written agreement dated June 3, 2010
that the Corporation entered into with the Federal Reserve Bank of New
York (the “Federal Reserve”) and the order dated June 2, 2010 that
FirstBank entered into with the FDIC and the Office of the Commissioner
of Financial Institutions of the Commonwealth of Puerto Rico (the “FDIC
Order”) that, among other things, require FirstBank to maintain certain
capital levels and reduce its special mention, classified, delinquent,
and non-performing assets; the risk of being subject to possible
additional regulatory actions; uncertainty as to the availability of
certain funding sources, such as retail brokered CDs; the Corporation’s
reliance on brokered CDs and its ability to obtain, on a periodic basis,
approval from the FDIC to issue brokered CDs to fund operations and
provide liquidity in accordance with the terms of the FDIC Order; the
risk of not being able to fulfill the Corporation’s cash obligations or
resume paying dividends to the Corporation’s stockholders in the future
due to the Corporation’s inability to receive approval from the Federal
Reserve to receive dividends from FirstBank or FirstBank’s failure to
generate sufficient cash flow to make a dividend payment to the
Corporation; the strength or weakness of the real estate markets and of
the consumer and commercial credit sectors and their impact on the
credit quality of the Corporation’s loans and other assets, including
the Corporation’s construction and commercial real estate loan
portfolios, which have contributed and may continue to contribute to,
among other things, the high levels of non-performing assets,
charge-offs, and the provision expense and may subject the Corporation
to further risk from loan defaults and foreclosures; adverse changes in
general economic conditions in Puerto Rico, the U.S., and the U.S.
Virgin Islands and British Virgin Islands, including the interest rate
environment, market liquidity, housing absorption rates, real estate
prices, and disruptions in the U.S. capital markets, which may reduce
interest margins, impact funding sources, and affect demand for all of
the Corporation’s products and services and reduce the Corporation’s
revenues, earnings, and the value of the Corporation’s assets; an
adverse change in the Corporation’s ability to attract new clients and
retain existing ones; a decrease in demand for the Corporation’s
products and services and lower revenues and earnings because of the
continued recession in Puerto Rico, the current fiscal problems, and
budget deficit of the Puerto Rico government and recent credit
downgrades of the Puerto Rico government; uncertainty about regulatory
and legislative changes for financial services companies in Puerto Rico,
the U.S., and the U.S. and British Virgin Islands, which could affect
the Corporation’s financial condition or performance and could cause the
Corporation’s actual results for future periods to differ materially
from prior results and anticipated or projected results; uncertainty
regarding the timing and final substance of any capital or liquidity
standards, including the final Basel III requirements and their
implementation in the U.S. through rulemaking by the Federal Reserve,
including anticipated requirements to hold higher levels of regulatory
capital and liquidity and meet higher regulatory capital ratios as a
result of final Basel III or other capital or liquidity standards;
uncertainty about the effectiveness of the various actions undertaken to
stimulate the U.S. economy and stabilize the U.S. financial markets, and
the impact such actions may have on the Corporation's business,
financial condition and results of operations; changes in the fiscal and
monetary policies and regulations of the federal government, including
those determined by the Federal Reserve, the FDIC, government-sponsored
housing agencies, and regulators in Puerto Rico and the U.S. and British
Virgin Islands; the risk of possible failure or circumvention of
controls and procedures and the risk that the Corporation’s risk
management policies may not be adequate; the risk that the FDIC may
further increase the deposit insurance premium and/or require special
assessments to replenish its insurance fund, causing an additional
increase in the Corporation’s non-interest expenses; the risk of not
being able to recover the assets pledged to Lehman Brothers Special
Financing, Inc.; the impact on the Corporation’s results of operations
and financial condition of acquisitions and dispositions; a need to
recognize additional impairments on financial instruments, goodwill, or
other intangible assets relating to acquisitions; the risks that
downgrades in the credit ratings of the Corporation’s long-term senior
debt will adversely affect the Corporation’s ability to access necessary
external funds; the impact of the Dodd-Frank Wall Street Reform and
Consumer Protection Act on the Corporation’s businesses, business
practices, and cost of operations; and general competitive factors and
industry consolidation. The Corporation does not undertake, and
specifically disclaims any obligation, to update any “forward-looking
statements” to reflect occurrences or unanticipated events or
circumstances after the date of such statements except as required by
the federal securities laws.
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