Will Deutsche Bank Have to Confess its Colonial/TBW Sins to Father Barofsky?
First of all, I would like to thank Deutsche Bank for frantically Googling themselves over the Colonial/Taylor, Bean & Whitaker drama otherwise I would have never thought to make this connection. So thanks go out to the DB rats for busting themselves out.
In case you've been under a rock for the last, oh, 27 hours, here's the sitch:
Colonial BancGroup and Taylor, Bean & Whitaker are in a WHOLE load of trouble. The Feds (as in FBI, not Bernanke), working with the Treasury, have raided their offices, seized documents, and scared the hell out mortgage and finance companies everywhere. (can I just say here that my analytics are cracking me up? You bastards better be scared. Here comes the hammer, you should duck right about..... NOW!) The FHA has banned TBW for providing "false" information to the agency and this is but the beginning. Meanwhile, who the hell was auditing these two? That's what I want to know.
So, where were we? Oh yeah. Deutsche Bank... Confess your sins!
Colonial BancGroup Signs Definitive Agreement with Investors Led by Taylor, Bean & Whitaker for a $300 Million Investment (via Reuters March 31, 2009):
Chairman, CEO and President, Robert E. Lowder, announced today the signing of a definitive agreement with investors led by Taylor, Bean & Whitaker Mortgage Company (TBW) (collectively referred to as the "Investors") for a $300 million equity investment in Colonial. The closing of the investment is subject to certain conditions being met and the approval of the bank regulatory authorities.
It is anticipated that Colonial will continue to operate as a stand-alone publicly-traded company with an independent board of directors and management team. Following completion of the transaction, on an as-converted basis, the Investors will own approximately 75% of Colonial's common stock outstanding and the proforma tangible common book value per share as of December 31, 2008 would have been $1.45 per share had the preference shares been assumed to have been converted to common equity.
"We are pleased to announce this proposed equity investment and to welcome TBW and the Investors as shareholders. This transaction should strengthen our financial position and allow Colonial to continue to offer its customers high quality banking services," said Mr. Lowder.
Under the terms of the agreement, which was unanimously approved by the board of directors of Colonial, the Investors will purchase 466,600 shares of contingently convertible voting preference stock (Series A stock) and 133,400 shares of contingently convertible non-voting preference stock (Series B stock) at a price of $500 per share for an aggregate purchase price of $300 million.
Additional terms include the following; (i) Colonial and the Investors agree to use commercially reasonable best efforts and to cooperate so as to consummate the transaction; (ii) Colonial and the Investors agree to cooperate on regulatory filings; (iii) TBW agrees to seek approval from appropriate regulators regarding the applicability of Regulation W to the existing relationships between Colonial and TBW; and (iv) Colonial agrees that it will not solicit alternative transactions or investments except Colonial has the right for 30 days to receive and entertain unsolicited proposals if such proposals constitute a superior proposal as defined in the agreement.
If Colonial enters into a superior proposal, or if certain other conditions are not satisfied, Colonial would pay a termination fee of $10 million. Upon closing, the Colonial board of directors will be fixed at fifteen members of which five will be selected by the Investors as provided in the agreement. Within 60 days of closing, the board of directors will consist of five continuing members, the five members as selected by the Investors, and five other members mutually agreeable to Colonial and the Investors.
TBW is privately-owned and is a savings and loan holding company regulated by the Office of Thrift Supervision through its ownership of Platinum Community Bancshares, the holding company for Platinum Community Bank, a federal savings bank headquartered in Rolling Meadows, Illinois. Because of TBW's regulatory status, the agreement contemplates that Colonial Bank will convert to a federal savings and loan association. TBW is being advised by Deutsche Bank Securities, Inc.
So what spooked TBW?
And what in the hell was Deutsche Bank thinking?! How long until they are dragged into this mess?
I can only hope Father Barofsky is on their doorstep as we speak with the wafers and a chalice full of Ohhhhh Crap!