If successful, these two transactions would provide common equity capital beyond the $1.1 billion common equity buffer required as per the results of Fifth Third’s Supervisory Capital Assessment Program assessment under the more adverse scenario.
Fifth Third plans to sell up to an aggregate of $750 million of its common shares from time to time. It expects a portion of the proceeds of shares issued under this offering to be utilized to fund the cash portion of its offer to exchange cash and common shares for Series G convertible preferred depositary shares. Proceeds of the offering not utilised in the exchange offer will be available for general corporate purposes.
These purposes would include the future use of the proceeds – in addition to other capital or funds it has generated or will generate to repay all or a portion of the preferred stock and warrants the bank issued to the US Department of Treasury as part of the Capital Purchase Program, subject to consultation with and approval from regulatory authorities.
Fifth Third will concurrently offer holders of its $1.1 billion Series G convertible preferred depositary shares, in exchange for tendering their shares in integral multiples of 250 shares to Fifth Third, a cash payment in a fixed amount of $30 per Series G depositary share in addition to a conversion of the common shares underlying the Series G preferred shares. These transactions, if successful, combined with the expected capital benefit from the completion of its pending processing joint venture with Advent International, would significantly enhance the company’s capital ratios.
Morgan Stanley and Merrill Lynch are acting as sales agents and/or principals in connection with the equity offering, with Sullivan & Cromwell acting as their counsel. J.P. Morgan Securities is acting as financial advisor in connection with the offer to exchange, with Wachtell, Lipton, Rosen & Katz acting as its counsel. Graydon Head & Ritchey is acting as legal advisor to Fifth Third in both transactions.
