First Security Group, Inc. (NASDAQ: FSGI), the bank holding company for FSGBank, N.A., announced on Wednesday the results of the company’s rights offering. Nearly $7.8 million of additional common stock was requested for the $5.0 million offering. Final allocations and delivery of shares are expected by the end of September.
In April 2013, the company completed a recapitalization, including the restructuring of its TARP CPP preferred stock.
On April 11, the company issued approximately 9.9 million shares of the Company’s common stock to the U.S. Treasury for full satisfaction of the treasury’s TARP CPP investment in the company. The treasury immediately sold the common stock to institutional and other accredited investors previously identified by the company at $1.50 per share. On April 12, the company issued an additional approximately 50.8 million shares of common stock at $1.50 per share to institutional and other accredited investors. In aggregate, investors purchased 60,735,000 shares for $91.1 million.
As part of the recapitalization, shareholders of record as of April 10, were provided the right to purchase two shares of company common stock for every share owned as of the record date, as well as the opportunity to request additional shares of company common stock, if available. The subscription price was $1.50 per share with a maximum of 3,329,234 shares of company common stock available, or approximately $5.0 million.
“As the final component of the recapitalization, we are very grateful for the positive response from our legacy shareholders,” said Michael Kramer, president and chief executive officer of First Security. “With requests totaling over 150% of the maximum size of the offering, we believe that this is another vote of confidence for our markets, our business plan, and our people.”
The company anticipates downstreaming the net proceeds to FSGBank in order to further solidify FSGBank’s regulatory capital ratios and to support future balance sheet growth. The combined effects of the additional capital from the rights offering and the previously announced recapitalization and completed loan sale are expected to result in an improved risk profile, enhanced profitability and compliance with most, but not all, aspects of the regulatory orders of the company and FSGBank.
Raymond James & Associates, Inc. acted as financial advisor and dealer manager for First Security Group, Inc. in connection with the Rights Offering. Bryan Cave LLP acted as legal counsel to First Security Group, Inc in connection with the Rights Offering.