PrivateBancorp has received preliminary approval from the U.S. Department of the Treasury to participate in its capital purchase programme under the Emergency Economic Stabilisation Act of 2008. PrivateBancorp received preliminary approval for a $244 million investment.
Under the capital purchase programme (CPP) standard terms, PrivateBancorp expects to issue to the U.S. Treasury $244 million in senior preferred stock which will pay cumulative dividends at a rate of 5% per year for five years. The rate will increase to 9% per year thereafter if the preferred shares are not redeemed by the company.
In addition to the preferred stock, PrivateBancorp also expects to issue to the U.S. Treasury warrants to purchase 1.29 million shares of common stock of the company having an exercise price of $28.35 million per share and an aggregate market value equal to 15% of the U.S. Treasury’s senior preferred investment.
Larry Richman, president and CEO of PrivateBancorp, said: Since launching the strategic growth plan in late 2007, PrivateBancorp has taken proactive steps to ensure it remains well-capitalised. This additional capital infusion will allow us to continue to meet the lending needs of our clients.
The U.S. Treasury’s capital purchase programme is a voluntary programme designed to assist healthy institutions build their capital positions to support the U.S. economy by increasing the flow of financing to the U.S. businesses and consumers. Under the programme, senior preferred stock is issued to the U.S. Department of Treasury. The preferred stock will pay a dividend for the first five years, after which the rate will increase to 9% if the preferred shares are not redeemed by the company.
