UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of
1934
Date of Report (Date of earliest event reported): June 10, 2011
FNB United Corp.
(Exact name of registrant as specified in its charter)
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North Carolina
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000-13823
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56-1456589
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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150 South Fayetteville Street, Asheboro,
North Carolina
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27203
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code: (336) 626-8300
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01. Entry into Material Definitive Agreement.
Subscription Agreements
On
June 16, 2011, FNB United Corp. (the Company), parent company of CommunityONE Bank, National Association (CommunityONE), entered into subscription agreements (the Subscription Agreements) with accredited
investors pursuant to which those investors agreed to purchase shares of the Companys common stock (Common Stock), at a purchase price of $0.16 per share, for an aggregate of approximately $75.0 million.
The proposed investments by such investors are part of an expected aggregate $310 million capital raise by the Company from institutional and other
investors through various private placement transactions. As previously reported, the Company has entered into separate investment agreements (the Investment Agreements) with each of an affiliate of The Carlyle Group and affiliates of
Oak Hill Capital Partners (together, the Lead Investors), pursuant to which each Lead Investor has agreed, subject to certain conditions, to invest approximately $77.5 million in Common Stock (each, an Investment and,
collectively, the Investments). In connection with the proposed capital raise and as previously reported by the Company, the Company has entered into an Agreement and Plan of Merger, dated April 26, 2011, with the Bank of Granite
Corporation (Granite) and a wholly owned acquisition subsidiary of the Company (the Merger Agreement), pursuant to which the wholly owned subsidiary of the Company would, subject to certain conditions, merge with and into
Granite, with Granite surviving as a subsidiary of the Company (the Merger).
The closings under the Subscription Agreements are
subject to the following conditions, among others: receiving aggregate gross proceeds of at least $310 million from the Investments and sales of Common Stock to other investors in private placements by the Company; the closing conditions under the
Merger Agreement having been satisfied or waived; the shares of Common Stock to be issued under the Investment Agreements being authorized for listing on NASDAQ; the exchange of the Companys preferred stock (the TARP Preferred
Stock) issued to the U.S. Treasury (Treasury) and the amount of accrued and unpaid dividends on the TARP Preferred Stock for Common Stock; the satisfaction of conditions regarding minimum liquidity and non-brokered deposits and the
level of non-performing assets; receipt of advice as to the absence of an Internal Revenue Code section 382 ownership change as a result of the private placement investments; and absence of a material adverse effect on the Company and its
subsidiaries.
Pursuant to the Subscription Agreements, the investors are entitled to certain preemptive rights and registration rights. The
Company and the investors have also agreed to provide each other with certain indemnification rights.
The foregoing description of the
Subscription Agreements does not purport to be complete and is qualified in its entirety by reference to the form of subscription agreement filed as Exhibit 10.1 hereto, which is incorporated into this report by reference. The form of subscription
agreements and the above description of the Subscription Agreements have been included to provide investors and security holders with information regarding the terms of the Subscription Agreements. They are not intended to provide any other factual
information about the Company or its subsidiaries and affiliates.
Amendments to the Investment Agreements and the Merger Agreement
As previously reported, one of the conditions to the completion of each Investment Agreement and the Merger Agreement is the settlement of indebtedness of
CommunityONE outstanding and held by SunTrust Bank for cash at the discounted values specified in the Investment Agreements (the SunTrust Settlement).
On the terms and subject to the conditions set forth in a letter agreement dated May 31, 2011 between CommunityONE and SunTrust Bank, SunTrust Bank has preliminarily agreed to settle
CommunityONEs indebtedness for cash in amount equal to 35% of the principal thereof, plus 100% of the unpaid and accrued interest on the debt as of the closing date of the Investments.
As a result of the revised terms of the SunTrust Settlement described above, on June 16, 2011, the Company, its wholly owned acquisition subsidiary, and Granite agreed to amend the terms of the
Merger Agreement to revise the discounted settlement amount of the SunTrust indebtedness from 25% to 35% of the principal thereof, plus 100% of the unpaid and accrued interest on the debt as of the closing date of the Investments. In addition, on
June 16, 2011, the Company and each Investor also agreed to amend the terms of their respective Investment Agreements to revise the discounted settlement amount of the SunTrust indebtedness from 25% to 35% of the principal thereof, plus 100% of
the unpaid and accrued interest on the debt as of the closing date of the Investments. The Company and each Investor have agreed to certain additional modifications to each of their respective the Investment Agreements. The amendment to the Merger
Agreement is filed as Exhibit 2.1, and the amendments to the Investment Agreements with each of the Lead Investors are filed as Exhibits 10.2 and 10.3, respectively.
The closing of each Investment remains subject to the following conditions, among others: receiving aggregate gross proceeds of at least $310 million from the Investments and sales of Common Stock to
other investors in private placements by the Company; the closing conditions under the Merger Agreement having been satisfied or waived; antitrust clearance; receipt of bank regulatory approvals; Company shareholder approval of certain proposals
necessary for the Company to consummate the Investments, the Merger and the related transactions; the shares of Common Stock to be issued under the Investment Agreements being authorized for listing on NASDAQ; the exchange of the Companys TARP
Preferred Stock on the terms described above; the completion of the SunTrust Settlement; the settlement of preferred stock of CommunityONE outstanding and held by SunTrust for cash at the discounted values specified in the Investment Agreements;
changes to the Companys Board of Directors; the absence of burdensome regulatory conditions or agreements at closing; the satisfaction of conditions regarding minimum liquidity and non-brokered deposits and the level of non-performing assets;
the effectiveness of the Companys Deferred Prosecution Agreement with the U.S. Department of Justice (as previously reported in the Companys current report on Form 8-K dated April 26, 2011); receipt of advice as to the absence of an
Internal Revenue Code section 382 ownership change as a result of the private placement investments; and the Company and the Granite not having experienced a material adverse effect.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer
of Listing.
On June 10, 2011, the Company received a written notice from The Nasdaq Stock Market of the Nasdaq staffs
determination that the Company has not provided a definitive plan evidencing its ability to achieve near-term compliance with all of the continued listing requirements of The Nasdaq Capital Market and, in particular, Rule 5550(a)(2), the bid price
rule, and Rule 5550(b), the stockholders equity rule. Accordingly, unless the Company requests an appeal of this staff determination, trading of the Companys common stock will be suspended at the opening of business on June 21,
2011, and a Form 25-NSE will be filed with the Securities and Exchange Commission, which will remove the Companys common stock from listing and registration on The Nasdaq Stock Market.
The Company intends to request an appeal of the staffs determination to the Nasdaq panel by June 17, 2011, which request will stay the suspension of the Companys common stock and filing
of the Form 25-NSE pending the panels decision. The Companys common stock will continue to trade on The Nasdaq Capital Market under the symbol FNBN during the appeals period.
Item 3.02. Unregistered Sales of Equity Securities
On June 13, 2011, the Company entered into Subscription Agreements providing for the sale of Common Stock for an aggregate of approximately $75.0 million, as described above under Item 1.01. To
the extent required by Item 3.02 of Form 8-K, the information contained or incorporated in Item 1.01 of this Form 8-K is incorporated by reference in this Item 3.02.
The issuance and sale of the Common Stock to the investors pursuant to the Subscription Agreements is exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. The
Company has not engaged in general solicitation or advertising with regard to the issuance and sale of the Common Stock to the investors and is not offering securities to the public in connection with the investments.
Item 9.01. Financial Statements and Exhibits.
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No.
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Description
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2.1
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Amendment No. 1, dated as of June 16, 2011, to Agreement and Plan of Merger by and among FNB United Corp., Gamma Merger Corporation and Bank of Granite Corporation.
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10.1
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Form of Subscription Agreement by and between FNB United Corp. and private placement investors.
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10.2
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Amendment No. 1, dated as of June 16, 2011, to Investment Agreement by and between FNB United Corp. and Carlyle Financial Services Harbor, L.P.
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10.3
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Amendment No. 1, dated as of June 16, 2011, to Investment Agreement by and between FNB United Corp., Oak Hill Capital Partners III, L.P., and Oak Hill Capital Management Partners
III, L.P.
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Cautionary Statement
The issuance of the securities pursuant to the Investment Agreement has not been and will not be registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be
offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. This Current Report on Form 8-K shall not constitute an offer to sell
or the solicitation of an offer to buy the securities, nor shall there be any sale of the securities in any jurisdiction or state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction or state.
Forward-Looking Statements
This Current Report on Form 8-K and the attached exhibits may contain forward-looking statements concerning the Companys plans for raising capital and the Merger, the conditions necessary for
closing on proposed capital investments and Merger, concerning plans and objectives of management for future operations, concerning future economic performance, or concerning any of the assumptions underlying or relating to any of the foregoing.
Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts, and may include the words believes, plans, intends, expects,
anticipates, forecasts or words of similar meaning. There can be no assurance that the Company will be able to close on the transactions with investors and obtain required capital or close on the Merger, or that other actual
results, performance or achievements of the Company will not differ materially from those expressed or implied by forward-looking statements. Factors that could cause actual events or results to differ significantly from those described in the
forward-looking statements include, but are not limited to, the Companys ability to complete the proposed transactions and other aspects of its recapitalization and recovery plans. For further information on factors that could cause actual
results to materially differ from projections, please see the Companys publicly available Securities and Exchange Commission filings, including the Companys 2010 Annual Report on Form 10-K for the year ended December 31, 2010 and
other filings with the SEC. The Company does not undertake to update any of its forward-looking statements.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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FNB United Corp.
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(Registrant)
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June 16, 2011
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/s/ MARK A. SEVERSON
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(Date)
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Mark A. Severson
Executive Vice President and Treasurer
(Principal Financial and
Accounting Officer)
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INDEX TO EXHIBITS
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No.
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Description
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2.1
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Amendment No. 1, dated as of June 16, 2011, to Agreement and Plan of Merger by and among FNB United Corp., Gamma Merger Corporation and Bank of Granite Corporation.
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10.1
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Form of Subscription Agreement by and between FNB United Corp. and private placement investors.
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10.2
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Amendment No. 1, dated as of June 16, 2011, to Investment Agreement by and between FNB United Corp. and Carlyle Financial Services Harbor, L.P.
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10.3
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Amendment No. 1, dated as of June 16, 2011, to Investment Agreement by and between FNB United Corp., Oak Hill Capital Partners III, L.P., and Oak Hill Capital Management Partners
III, L.P.
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