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):
February 25, 2010
MIDWEST
BANC HOLDINGS, INC.
(Exact
Name of Registrant as Specified in its Charter)
001-13735
(Commission
File Number)
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Delaware
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36-3252484
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(State
or other Jurisdiction of Incorporation)
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(I.R.S.
Employer Identification No.)
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501
West North Avenue
Melrose
Park, Illinois 60160
(Address
of Principal Executive Offices)
(708)
865-1053
(Registrant’s
Telephone Number, Including Area Code)
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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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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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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¨
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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 a
Material Definitive Agreement
.
On
February 25, 2010, Midwest Banc Holdings, Inc. (the “Company”) entered into
an exchange agreement (the “Exchange Agreement”) with the United States
Department of the Treasury (“U.S. Treasury”) pursuant to which the U.S. Treasury
agreed to exchange all shares of the Company’s Fixed Rate Cumulative Perpetual
Preferred Stock, Series T it owns, having an aggregate approximate liquidation
preference of $84.8 million, plus approximately $4.5 million in unpaid dividends
on such preferred stock, for a new series of Fixed Rate Cumulative Mandatorily
Convertible Preferred Stock, Series G (the “New Preferred Stock”) with a like
liquidation preference (the “Exchange”). The New Preferred Stock will
have the same dividend rate as the Series T preferred stock, namely a dividend
rate of 5% per annum from the issue date to February 15, 2014 and 9% per annum
thereafter.
Each
share of New Preferred Stock will be convertible into approximately 528 shares
of common stock of the Company, subject to any required anti-dilution
adjustments. If the U.S. Treasury were to convert all of the
approximately $89.3 million in liquidation preference of the New Preferred
Stock, the Company would be required to issue approximately 47.1 million shares
of its common stock, subject to any required anti-dilution
adjustments.
Under the
terms of the Exchange Agreement, the U.S. Treasury has the authority to convert
the New Preferred Stock into the Company’s common stock at any
time. In addition, the Company can compel a conversion of the New
Preferred Stock into common stock, subject to the following
conditions:
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(i)
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the
Company receives appropriate approvals from the Federal
Reserve;
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(ii)
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approximately
$78.8 million principal amount of the Company’s senior and subordinated
debt shall have been previously converted into common stock on terms
acceptable to the U.S. Treasury in its sole
discretion;
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(iii)
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the
Company shall have completed a new cash equity raise of not less than $125
million on terms acceptable to the U.S. Treasury in its sole discretion;
and
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(iv)
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the
Company has made the anti-dilution adjustments to the New Preferred Stock,
if any, as required by the terms
thereof.
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Unless
earlier converted, the New Preferred Stock will convert automatically into
shares of the Company’s common stock on the seventh anniversary of the issuance
of the New Preferred Stock. As part of the terms of the Exchange, the
Company also agreed to amend and restate the terms of the U.S. Treasury’s
warrant, dated December 5, 2008, to purchase 4,282,020 shares of common stock,
in order to adjust the conversion price to be consistent with the conversion
price applicable to the New Preferred Stock. The Exchange remains
subject to certain customary closing conditions.
The
foregoing summary of the Exchange Agreement does not purport to be complete and
is qualified in its entirety by reference to the Exchange Agreement attached
hereto as Exhibit 2.1 and incorporated herein. The Exchange
Agreement has been included to provide the agreed-upon terms of the transactions
described in this Form 8-K. Except for its status as a contractual
document that establishes and governs the legal relations among the parties
thereto with respect to the transactions described in this Form 8-K, this
agreement is not intended to be a source of factual, business or operational
information about the parties. The representations, warranties and
covenants contained in the Exchange Agreement were made only for purposes of
such agreement and as of specific dates, were solely for the benefit of the
parties to such agreement, and may be subject to limitations agreed upon by the
parties, including being qualified by disclosures exchanged between the parties
in connection with the transactions contemplated by such
agreement. Accordingly, investors should not rely on the
representations, warranties and
covenants
or any descriptions thereof as characterizations of the actual state of facts or
condition of the parties.
Item
3.02.
Unregistered Sale of Equity
Securities
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The
information set forth in Item 1.01 above is incorporated into this item by
reference. The Company proposes to issue the New Preferred Stock and
the amended warrant pursuant to the exemption from registration under Section
4(2) of the Securities Act of 1933, as amended.
Item
3.03.
Material Modification to
Rights of Security Holders
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As
described in Item 1.01 above, the transactions contemplated by the Exchange
Agreement will result in the issuance of the New Preferred Stock, which will be
a class of convertible preferred stock senior to the Company’s Series A
Noncumulative Redeemable Convertible Perpetual Preferred Stock (the
“Series A Preferred Stock”) and the remaining outstanding Depositary Shares
that represent fractional interests in the Series A Preferred
Stock. The New Preferred Stock will be senior to the Series A
Preferred Stock and the Company’s common stock with respect to dividend rights,
including cumulative dividend rights, and rights on liquidation, winding-up and
dissolution.
As
described in Item 5.07 below, the Company’s common stockholders approved
amendments to the Company’s Certificate of Incorporation that will, when
effected by the Company, modify the rights of the holders of the Company’s
remaining outstanding Depositary Shares. These amendments were
previously approved by the holders of Depositary Shares. The general
effects of such amendments are disclosed under the sections captioned “Dividend
Blocker Amendment” and “Director Amendment” in the Company’s proxy statement for
the special meeting of the holders of Series A Preferred Stock held on January
21, 2010. The information in Item 5.07 with respect to approval
by the Company’s common stockholders of amendments to the Company’s Certificate
of Incorporation to modify the rights of the holders of the Company’s
Series A Preferred Stock is incorporated into this item by
reference.
Item
5.01.
Changes in Control of
Registrant
.
The
information set forth in Item 1.01 above is incorporated into this item by
reference. Any conversion of all or a significant number of shares of
New Preferred Stock as described in Item 1.01 above would result in the
U.S. Treasury becoming the owner of a substantial number of shares of the
Company’s common stock.
Item
5.07.
Submission of Matters to
Vote of Security Holders
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At a
special meeting of the holders of the Company’s common stock held on March 2,
2010, the Company’s stockholders approved by the requisite number of votes all
proposals to amend the Company’s Certificate of Incorporation as well as the
issuance of shares of common stock to the U.S. Treasury upon any conversion of
the New Preferred Stock. The proposals approved were as
follows:
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amending
the Company’s Certificate of Incorporation to increase the number of
authorized shares of common stock of Midwest from 64 million to four
billion shares (“Authorized Share
Increase”);
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amending
the Company’s Certificate of Incorporation to (i) effect a reverse
stock split of the Company’s common stock at any time prior to December
31, 2010 at one of four reverse split ratios, 1-for-100, 1-for-150,
1-for-200, or 1-for-250, as determined by the board of directors in its
sole discretion and (ii) if and when the reverse stock split is
effected, reduce the number
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of
authorized shares of our common stock by the reverse split ratio
determined by the board of directors (“Reverse Stock
Split”);
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·
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amending
the Company’s Certificate of Incorporation to eliminate the voting rights
of shares of common stock with respect to any amendment to the Certificate
of Incorporation (including any certificate of designation related to any
series of preferred stock) that relates solely to the terms of one or more
outstanding series of preferred stock, if such series of preferred stock
is entitled to vote, either separately or together as a class with the
holders of one or more other such series, on such amendment (“Preferred
Stock Change”);
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eliminating
the requirements contained in the certificate of designation of the Series
A Preferred Stock that:
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·
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full
dividends on all outstanding shares of the Series A Preferred Stock must
have been declared and paid or declared and set aside for the then current
dividend period before the Company may pay any dividend on, make any
distributions relating to, or redeem, purchase, acquire or make a
liquidation payment relating to the Company’s common stock or any other
securities junior to the Series A Preferred
Stock;
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·
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if
full dividends are not declared and paid in full on the Series A Preferred
Stock, dividends with respect to all series of stock ranking equally with
the Series A Preferred Stock will be declared on a proportional basis,
such that no series is paid a greater percentage of its stated dividend
than any other equally ranking
series;
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·
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a
series of preferred stock ranking equally with the Series A Preferred
Stock cannot be issued without the approval of holders of the Series A
Preferred Stock if the certificate of designation for such parity
preferred stock will provide that the dividends on the parity preferred
stock will cumulate; and
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·
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no
dividends shall be paid or declared on any particular series of preferred
stock unless dividends are paid or declared pro rata on all shares of
outstanding preferred stock which rank equally as to dividends with such
particular series (collectively the “Dividend Blocker
Amendment”);
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·
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eliminating
the requirement contained in the certificate of designation of the Series
A Preferred Stock that holders of Series A Preferred Stock have a right to
elect two directors if dividends have not been paid for six quarterly
dividend periods, whether or not consecutive (the “Director Amendment”);
and
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·
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the
issuance of shares of common stock of the Company upon any conversion of
the New Preferred Stock by the U.S. Treasury into shares of common stock
(“Common Stock Issuance”).
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The
results of the voting on the foregoing proposals were as follows:
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Proposal
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For
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Against
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Abstain
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Broker
Non-Votes
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Authorized
Share Increase
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31,008,000
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2,965,524
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79,295
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—
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Reverse
Stock Split
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31,240,218
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2,707,950
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104,652
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—
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Preferred
Stock Change
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23,557,424
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2,819,187
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84,203
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7,592,006
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Dividend
Blocker Amendment
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24,774,364
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1,540,665
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145,784
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7,592,006
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Director
Amendment
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24,700,694
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1,651,638
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108,482
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7,592,006
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Common
Stock Issuance
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24,324,157
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2,057,675
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78,982
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7,592,006
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Item
9.01.
Financial Statements and
Exhibits
.
(d) Exhibits
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2.1
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Exchange
Agreement, dated as of February 25, 2010, by and between Midwest Banc
Holdings, Inc. and the United States Department of the
Treasury
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SIGNATURES
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, thereunto duly authorized.
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MIDWEST BANC HOLDINGS,
INC.
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By:
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/s/JoAnn Sannasardo Lilek
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JoAnn
Sannasardo Lilek
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Executive
Vice President and Chief Financial Officer
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INDEX TO
EXHIBITS
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2.1
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Exchange
Agreement, dated as of February 25, 2010, by and between Midwest Banc
Holdings, Inc. and the United States Department of the
Treasury
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