First Merchants, a financial holding company, has received $116 million of equity capital by issuing 116,000 shares of fixed rate cumulative perpetual preferred stock, series A, and a warrant to purchase up to 991,453 shares of the company’s common stock, at an initial per share price of $17.55 to the U.S. Treasury Department.
The designated preferred stock pays cumulative dividends at a rate of 5% per year for the first five years and 9% per year thereafter. The company has the ability to repay the obligation at any time subject to consultation with its primary regulator, said First Merchants.
Repayment of the full amount of the designated preferred stock issuance by December 31, 2009 with the proceeds of a sale of tier one qualifying perpetual preferred stock or common stock for cash would reportedly result in a 50% reduction in the number of warrants outstanding.
Michael Rechin, president and CEO of First Merchants, said: Our stakeholders include our customers, communities, employees and shareholders. The decision to participate in the capital purchase programme was based on our desire to add the lowest cost capital in order to support continued economic growth in Central Indiana and Ohio. Extending credit renewals and new credit for appropriately structured lending opportunities support the markets where our employees live and work.
