By Susanna Moon
Chicago, Dec. 3 - Cornerstone Bancshares Inc. extended its offer for up to $15 million of 10% perpetual series A convertible preferred stock, or 600,000 shares at $25 per share, according to a 424B3 filing with the Securities and Exchange Commission.
The offer will now run through June 30, 2011 and is being conducted on a best-efforts basis.
The company said it may end the offering at any time if it decides that the amount of subscriptions provides adequate capitalization for it and its bank subsidiary.
Cornerstone said on June 28 that the offering was being made to existing shareholders, company executives and employees. After July 21, the preferred shares were to be made available to the public.
As previously noted, each preferred will be convertible at the holder's option at any time at an initial conversion price of $5 per common share. Cash will be paid in lieu of issuing any fractional shares.
The convertibles are non-callable for five years and then are convertible after July 31, 2015 at the issuer's option if the price of the company's common stock exceeds 150% of the conversion price for 30 consecutive trading days.
As of March 2010, the Federal Reserve Bank restricted Cornerstone's ability to declare or pay any dividends. Dividends on the convertibles will therefore accumulate and will not be declared or paid until the Federal Reserve Bank terminates or waives the restriction.
Proceeds will be used to retire Cornerstone debt to Silverton Bridge Bank, NA, as successor in receivership to Silverton Bank, NA and controlled by the FDIC, and to fund anticipated holding company expenses, including dividends that will accumulate with respect to the convertibles until such time as Cornerstone is permitted to declare and pay the dividends, and to provide the balance, if any, as additional capital to the bank so that it may meet required capital levels.
Cornerstone's common stock is quoted on the OTC Bulletin Board under the symbol "CSBQ." On June 23, the last reported sale price of the common stock was $1.95 per share.
Cornerstone is a bank holding company based in Chattanooga, Tenn.
| Issuer: | Cornerstone Bancshares Inc.
|
| Issue: | Series A perpetual convertible preferred stock
|
| Amount: | Up to $15 million
|
| Maturity: | Perpetual
|
| Dividend: | 10%
|
| Price: | Par of $25
|
| Conversion price: | $5
|
| Call: | After five years, with 150% hurdle
|
| Pricing date: | June 23
|
| Stock symbol: | OTCBB: CSBQ
|
| Stock price: | $1.95 as of June 23, $1.62 at close on Dec. 2
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
