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  Staff Interpretation Letter 2009-10
Identification Number 728
This is in response to your correspondence regarding the applicability of NASDAQ’s shareholder approval requirements to proposed issuances of common stock in exchange for one or more series of the Securities (the “Exchange”). Specifically, you asked whether the Exchange would be a public offering pursuant to IM-5635-3.
According to the information you provided, the Securities consist of two series of perpetual preferred stock and four series of trust preferred securities, which were initially issued at various times in underwritten public offerings.  The first offering was conducted approximately twelve years ago, and the most recent, approximately five years ago.  Four of the series are listed on NASDAQ, and the other two are traded over-the-counter. Each series has at least 600 beneficial owners.
The Exchange would be conducted as a tender offer. All of the holders of each series for which an offer is made would be offered common stock with a value expected to be more than the trading price, but less than the liquidation value, of the Securities that would be exchanged. The exact pricing would be determined by the company’s board of directors after considering analysis from a nationally recognized investment bank. The number of shares of common stock that could be issued in the Exchange would exceed 20% of the pre-transaction outstanding shares. You stated that the Exchange would not vest control with any shareholder due, in part, to requirements applicable to the company as a financial institution.
The company is planning the Exchange in response to the adverse economic and market conditions over the past several months that have resulted in the need for financial institutions to raise equity capital to maintain financial strength and meet regulatory requirements. In the Exchange, the company would replace the Securities, which are not treated as common equity, with common stock.
Following our review of the information you submitted, we have determined that the Exchange would be a public offering pursuant to IM-5635-3. We have reached this conclusion because the Securities were initially publicly offered and are currently publicly traded, the Securities are widely held, and the Exchange would be by means of a registered exchange offer available at the same price to all holders of any series of the Securities that is the subject of an exchange offer.
Publication Date*: 7/31/2012 Mailto Link Identification Number: 728
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