Broadway Financial Corporation (the “Company”) (NASDAQ Capital Market:
BYFC), parent company of Broadway Federal Bank, f.s.b. (the “Bank”),
today reported that the holders of senior securities of the trust entity
that holds the Company’s Floating Rate Junior Subordinated Debentures
due March 17, 2014 (the “Debentures”) approved the Company’s proposal to
extend the maturity of the Debentures to March 17, 2024. The approval to
extend the maturity is conditioned upon various matters, including
raising a minimum of at least $6 million of new equity capital and
approvals by the Company’s regulators and senior lender. Pursuant to the
proposal, the Company will pay all accrued interest on the Debentures
through to the concurrent closings of the modification of the indenture
for the Debentures and the private placement that the Company intends to
complete to raise the capital necessary to fulfill the terms of the
proposal, plus up to $900,000, or 15%, of the principal amount of the
Debentures at face value as consideration for the extension of the
Debentures.
The modification of the indenture for the Debentures will not change the
remaining principal amount of the Debentures or the mechanism for
determining the quarterly adjustment to the floating interest rate on
the Debentures, which will remain 3-Month LIBOR plus a spread of 2.54%.
After the proposed payment of all accrued interest and up to 15% of the
principal amount of the Debentures, the revised indenture will require
the Company to make quarterly payments of interest only on the remaining
principal, subject to regulatory approval, for the five years ending
March 17, 2019, and then quarterly payments of interest plus constant
amounts of principal commencing June 17, 2019 to fully amortize the debt
by March 17, 2024.
The Company has not paid interest on the Debentures since June 2010
because of regulatory restrictions, including provisions imposed by an
Order to Cease and Desist entered into by the Company and the Office of
Thrift Supervision effective on September 9, 2010. As of December 31,
2013 the accumulated unpaid interest on the Debentures was $656 thousand.
Chief Executive Officer, Wayne Bradshaw, stated, “We are pleased to
report that the requisite investors of the trust that holds our Floating
Rate Junior Subordinated Debentures have approved our proposal. This is
a critical milestone in our plan to establish a strong, simple balance
sheet for the Company that will allow Broadway to raise capital to
support the growth objectives of our wholly-owned banking subsidiary,
Broadway Federal Bank, f.s.b. Also, the terms approved for extending the
maturity of the Debentures further reduce the debt servicing
requirements of the Company for the intermediate term.”
He continued, “This approval allows us to continue our efforts to grow
our loan portfolio to increase net interest income. After making the
agreed upon payments for the Debentures, we intend to use a portion of
the remaining proceeds from the contemplated private placement to retire
a portion of our senior debt and strengthen the balance sheets of both
the Company and the Bank.
“We wish to thank the various parties that assisted us in negotiating a
solution for the pending maturity of the Debentures, and we remain
focused on continuing our efforts to resume growth for the Company and
increase value for our stockholders.”
About Broadway Financial Corporation
Broadway Financial Corporation conducts its operations through its
wholly-owned subsidiary, Broadway Federal Bank, f.s.b., which is the
leading community-oriented savings bank in Southern California serving
low to moderate income communities. We offer a variety of residential
and commercial real estate loan products for consumers, businesses, and
non-profit organizations, other loan products, and a variety of deposit
products, including checking, savings and money market accounts,
certificates of deposits and retirement accounts. The Bank operates
three full service branches, two in the city of Los Angeles, and one
located in the nearby city of Inglewood, California.
Shareholders, analysts and others seeking information about the Company
are invited to write to: Broadway Financial Corporation, Investor
Relations, 5055 Wilshire Blvd., Suite 500, Los Angeles, CA 90036, or
visit our website at www.broadwayfederalbank.com.
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based upon our management’s current
expectations, and involve risks and uncertainties. The Company cannot
provide any assurance that it will be successful in raising the
necessary capital to make the payments required to extend the maturity
of the Debentures, or that it will be able to obtain the required
approvals from the Company’s regulators and senior lender, and if
necessary, stockholders. Actual results or performance may differ
materially from those suggested, expressed, or implied by the
forward-looking statements due to a wide range of factors including, but
not limited to, the general business environment, the real estate
market, competitive conditions in the business and geographic areas in
which the Company conducts its business, regulatory actions or changes
and other risks detailed in the Company’s reports filed with the
Securities and Exchange Commission, including the Company’s Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q. The Company
undertakes no obligation to revise any forward-looking statement to
reflect any future events or circumstances, except to the extent
required by law.
Copyright Business Wire 2014