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Tennessee-based Community First Inc. plans rights offering, conversion offering

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Tennessee-based Community First Inc. plans rights offering, conversion offering

Columbia, Tenn.-based CommunityFirst Inc. on April 28 filed a registration statement for the issuanceof up to 250,000 shares of its common stock underlying rights it plans to issuein an offering. The proposed maximum aggregate offering price, typically estimatedto calculate the registration fee, is approximately $1.2 million.

It is distributing to common shareholders as of May 10, at nocost to shareholders, nontransferable subscription rights to buy additional commonshares at $4.75 per share. These rights entitle the shareholders to purchase a totalof 250,000 common shares for an aggregate purchase price of about $1.2 million.

Each shareholder will receive one subscription right for eachshare owned by them as of the record date, with each right entitling the holderto a basic subscription right and an oversubscription privilege. The basic subscriptionright will entitle the holder to purchase 0.075 common share at the subscriptionprice of $4.75 per share for each common share owned as of the record date.

The company plans to contribute a substantial portion, or perhapsall, of the net proceeds of the rights offering to the working capital of unit for use in the funding of loans; investment in securities; and payment of expenses.The company intends to retain any remaining balance of the proceeds for generalcorporate purposes, potentially including the payment of operating expenses andthe pursuit of possible future strategic opportunities, among other uses.

The company expects to receive approximately $1.2 million intotal proceeds from the rights offering, before expenses, assuming that all of theshares available in the rights offering are sold. The actual proceeds it gets willdepend on the number of subscription rights that are exercised by eligible shareholders.The Form S-1 has not yet become effective.

Community First Inc. on April 26 entered a preferred stock conversionagreement providing for the conversion of all of the issued and outstanding sharesof the company's fixed-rate noncumulative perpetual preferred stock, series A, havinga liquidation preference of $650 per share, into shares of the company's commonstock, par value $2.00 per share.

Each of these preferred shares in question, including those ownedby directors and executives, will convert into 136.84 common shares, representingan effective conversion price for each common share of $4.75.

In this conversion, the company expects to issue a total of 1,629,097common shares to the holders of the series A preferred stock, which has an aggregateliquidation preference of $7.7 million, in a private placement.