HMN Financial Inc. on May 21 entered into a warrant repurchase agreement with EJF Financial Services Fund LP.
EJF Financial Services in 2015 had acquired a warrant to buy 277,777.66 shares of common stock from HMN Financial at an exercise price of $4.68 per share. Pursuant to the terms of the buyback agreement, HMN Financial agreed to repurchase 138,888.66 warrants for common stock from EJF Financial Services at a purchase price of $14.32 per warrant, resulting in an aggregate purchase price of about $2.0 million.
The warrant repurchase price reflects the difference between the exercise price of the warrants and the closing market price of HMN Financial's common stock on the date the buyback agreement was executed. The warrant repurchase closed May 22.
Concurrently with the execution of the buyback agreement, EJF Financial Services exercised its rights pursuant to the warrant agreement to exercise on a cashless basis the remaining 138,889 warrants at an exercise price of $4.68 per share under the warrant agreement. After taking into account the shares withheld to satisfy the cashless exercise option, HMN Financial on May 22 issued 104,678 shares of common stock and $8.55 in cash for the fractional share to EJF Financial Services.
