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Tidelands explored recap and sale; chose to strike deal with United

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Tidelands explored recap and sale; chose to strike deal with United

TidelandsBancshares Inc. management decided to explore a sale of MountPleasant, S.C.-based TidelandsBank and a recapitalization through a common stock offering inearly 2013. About three years later, it agreed to be by Blairsville, Ga.-basedUnited Community BanksInc.

During that time frame, Tidelands attracted other proposals.One of these was from an institution wanting to pursue an acquisition in thecontext of a bankruptcy proceeding, which the Tidelands board rejected.

A preliminary proxy statement filed May 9 by Tidelandsindicated that in late 2014 through early 2015, the company entered intodiscussions with a community bank investor, which submitted a letter of intentproviding for a capital raise of $20 million at 16 cents per common share,redemption of series T preferred stock at a 90% discount and assumption and paymentof accrued dividends on trust preferred securities, among other things.However, discussions ended shortly thereafter because of the investor'sinvestments in other institutions and a lack of investable funds.

Tidelands also said that an investment banking firm made anunsolicited call with respect to a proposed recapitalization transaction, whichwould seek to raise between $36 million and $46 million at 40 cents per commonshare with no lead investor and no investor owning more than 9.9% of Tidelandsstock on a pro forma basis.

An offer from an institution was also delivered in writingon March 1. The offer provided for total consideration of $28 million.

Eventually the Tidelands board determined that the proposedmerger with United was the most favorable. United's substantial due diligenceon Tidelands and lower perceived execution risk were some of the reasons forthe decision.