Aug. 20, 2009 (Business Wire) -- The South Financial Group, Inc. (NASDAQ: TSFG) today announced that it has commenced an offer to exchange shares of its common stock, par value $1.00 per share (the “Common Shares”) for any and all outstanding shares of TSFG’s 10% Mandatory Convertible Non-Cumulative Preferred Stock, Series 2008ND-V; 10% Mandatory Convertible Non-Cumulative Preferred Stock, Series 2008ND-NV; 10% Mandatory Convertible Non-Cumulative Preferred Stock, Series 2008D-V; and 10% Mandatory Convertible Non-Cumulative Preferred Stock, Series 2008D-NV, each with no par value per share and a liquidation preference of $1,000 per share (“Preferred Stock”) (the “Exchange Offer”). Successful completion of this offer will improve TSFG’s capital structure by reducing its future Preferred Stock dividend payments and increasing its tangible common equity to tangible assets ratio.
On August 19, 2009, TSFG’s Board of Directors agreed to suspend the existing $0.01 quarterly dividend on the common stock. This action was undertaken because the Board of Directors believes that payment of a dividend on the common stock is inconsistent with the overall objective of the TSFG’s capital plan, which is to preserve and generate capital.
In connection with the Exchange Offer, for each share of Preferred Stock validly tendered and accepted in accordance with the terms of the Exchange Offer, TSFG will issue a number of its common shares that will be fixed according to an Exchange Ratio that will be determined at 4:30 p.m., New York City time, on the second trading day immediately preceding the expiration date of the offer. The offer is currently expected to expire on Friday, September 18, 2009, and the Exchange Ratio would be fixed at 4:30 p.m., New York City time, on September 16, 2009. For each share of Preferred Stock tendered (and not subsequently withdrawn), TSFG will issue 153.846 Common Shares plus a number of Common Shares equal to $131.25 divided by the arithmetic mean of the daily volume-weighted average per share price of our Common Shares of each trading day in the five consecutive trading day period ending on and including September 16, 2009 (the “Average VWAP”), subject to a maximum Exchange Ratio of 241.346 Common Shares. The Average VWAP and the total number of shares to be issued will be announced in a press release before the opening of Nasdaq trading on Thursday, September 17, 2009. This information also will be available from The Altman Group, the information agent.
The Exchange Offer will expire at 5:00 p.m., New York City time, on Friday, September 18, 2009, unless extended or earlier terminated by TSFG. Securities that are tendered into the Exchange Offer may be withdrawn at any time prior to this date. To receive the consideration in the Exchange Offer, holders must validly tender and not withdraw their shares of Preferred Stock prior to the expiration date.
