First Bancorp to Raise Capital, Announces Asset Disposition
First Bancorp (NASDAQ: FBNC), the parent company of First Bank, has completed a $33.8 million private placement offering to select institutional investors.
The private placement of stock consisted of an issuance of 2,656,294 shares of common stock and 728,706 shares of preferred stock, each at the same price of $10.00 per share. The preferred stock is entitled to the same dividend rate as common stock and is convertible into common stock, in a like amount, upon the occurrence of certain transfers of the preferred stock. The per share price in the transaction is 81% of tangible book value per common share at September 30, 2012 and 94% of tangible book value per common share as of that same date after considering the impact of the planned asset dispositions discussed below. No shareholder vote is required in connection with this capital raise.
The Company will use the proceeds from the capital raise to strengthen and remove risk from its balance sheet in anticipation of a planned disposition of classified loans and write-down of certain real estate assets as discussed below.
The Company plans to sell approximately $68 million of classified loans in a transaction expected to occur in early 2013. Additionally, the Company plans to write down by approximately 20%-30% a portion of its portfolio of non-covered foreclosed real estate assets that currently totals approximately $38 million in an effort to allow for the disposal of such properties in an accelerated time frame. The Company plans to mark down these classified loans and real estate assets in the fourth quarter of 2012, with the loan sale expected to be completed in January 2013 and the disposition of the foreclosed real estate to take place over a longer period. The Company expects these actions to result in an after-tax charge in the range of $28-$32 million, which will be recorded in the fourth quarter of 2012.
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