February 2, 2011
Authored by: Bryan Cave Leighton Paisner
In its earnings release issued on January 28, 2011, First Banks, Inc. (the “Company”) announced the successful completion of its consent solicitation addressed to the holders of the trust preferred securities issued by First Preferred Capital Trust IV (the “Trust”). The securities are listed on The New York Stock Exchange under the symbol “FBSPrA.” As a result of the consent solicitation, the Company was able to effect amendments to the related indenture, trust agreement and guarantee agreement that are designed to provide additional capital planning flexibility for the Company.
The amendments relate primarily to covenants restricting the Company’s activities during a period in which interest and dividend payments have been deferred in accordance with the terms of the securities. They provide an “exchange exception” to covenants against the Company’s or its subsidiaries’ acquisition of their capital stock during a deferral period, which the Company entered in September 2009. As a result of the amendments, the Company and its subsidiaries and affiliates may issue capital stock during a deferral period in exchange for or upon conversion of outstanding Company, subsidiary or affiliate capital stock or for outstanding Company indebtedness ranking pari passu with or junior to the debentures. The amendments also eliminate a covenant against the Company’s acquisition of any of the trust preferred securities issued by the Trust or less than all of the related debentures during deferral. These and other amendments are attached as exhibits to the Company’s Current Report on Form 8-K filed with the SEC on January 27, 2011 .
In the earnings release, the Company reported that the success of the consent solicitation better positions the Company to consider certain potential capital planning strategies to improve the its regulatory capital ratios and further strengthen its overall financial position.
Bryan Cave represented First Banks in the consent solicitation and has significant experience in dealing with trust preferred securities.