Company is selling shares at significant discount to investment group
By Devika Patel
Knoxville, Tenn., Sept. 24 - Palmetto Bancshares, Inc. obtained federal approval for a private placement of stock on Sept. 23, according to an 8-K filed Friday with the Securities and Exchange Commission. The deal priced for $100 million on May 25 and was increased to $103 million, the company said in Friday's filing.
The company is selling common shares at $2.60 per share to CapGen Capital Group V LP and other investors, including affiliates of Patriot Financial Partners, LP and affiliates of Sandler O'Neill Asset Management. The price per share reflects a 64.14% discount to the May 23 closing share price of $7.25.
CapGen has committed to invest $55 million.
The company has agreed to appoint a designee of CapGen to its board of directors. Also, the investors will have preemptive rights regarding future public or private equity offerings.
The company also said in a Thursday press release that it has received approval from the Federal Reserve board for this placement.
"Obtaining this regulatory approval was a key step for us to complete our private placement," chief executive officer Samuel L. Erwin said in the release.
"We currently expect to close the transaction in early October." Erwin continued.
"Our board of directors and employees have worked tirelessly over the past 18 months to position the company to raise capital. Completing the capital raise in this very challenging economic environment is a testament to our hard work and the value of the Palmetto Bank franchise."
The company will use the proceeds primarily to contribute capital to the Palmetto Bank. The capital contribution will result in the bank's capital adequacy ratios exceeding the minimum levels required to be categorized as "well capitalized."
Under the stock purchase agreement, the company also is permitted to conduct a $10 million stock offering after the closing of this placement.
"Moving closer to completing our capital raise is very important," chairman of the board L. Leon Patterson added in the release.
"We appreciate the loyal support of our shareholders over our 104-year history, and we continue to take value generating actions to reposition the company for the future."
Palmetto Bancshares is the holding company for the Palmetto Bank in Laurens, S.C.
| Issuer: | Palmetto Bancshares, Inc.
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| Issue: | Common stock
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| Amount: | $103 million
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| Price: | $2.60
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| Warrants: | No
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| Investor: | CapGen Capital Group V LP (for $55 million), Patriot Financial Partners, LP, Sandler O'Neill Asset Management
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| Pricing date: | May 25
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| Stock symbol: | Pink Sheets: PLMT
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| Stock price: | $7.25 at close May 25
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| Market capitalization: | $32.3 million
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