SunTrust Banks, Inc. has commenced a public offering of USD1.4 billion of its common shares (the “Equity Offering”), as well as an offer to purchase up to USD1 billion liquidation preference or amount of certain of its currently outstanding preferred and hybrid securities (the “Tender Offer”) for cash using proceeds from the Equity Offering. Proceeds from the Equity Offering and after-tax gains from the Tender Offer will qualify as Tier1 common capital.
The Equity Offering and Tender Offer represent an acceleration of the Company’s previously announced capital plan framework to increase the common equity component of SunTrust’s Tier 1 capital by USD2.2 billion as indicated by the Federal Reserve’s Supervisory Capital Assessment Program (“SCAP”).
Upon completion of the Equity Offering, Tender Offer and previously announced internal actions, the Company expects to have fully satisfied its obligation under the SCAP. The components of the Company’s capital plan include:
-the completion of approximately USD260 million of the Company’s previously announced USD1.25 billion “at the market” common stock offering,-the sale of selected securities that the Company expects may generate approximately USD300 million of Tier 1 common equity,
-the Equity Offering, which is expected to raise approximately USD1.4 billion, and-the Tender Offer, which is expected to generate approximately USD250 million of additional Tier 1 common equity upon completion.
“Today’s announcement underscores that we are on a clear path to achieve our previously announced capital objectives as we intensify our focus on the future,” says James M. Wells III, chairman and chief executive officer, SunTrust. In addition, Wells noted that completion of the Company’s capital-related initiatives will enhance SunTrust’s ability to repay, upon regulatory approval and at the appropriate time, Preferred Stock obtained through participation in the U.S. Treasury’s Capital Purchase Plan.
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