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CAPITOL BANCORP LTD Message Board

  • lordofthetrades lordofthetrades Jul 24, 2012 11:06 AM Flag

    Moving Forward with the standby plan

    Ok, so assuming the standby plan is moving forward, does anyone know logistically how this will work.

    I assume that shares of CBCR will be delisted? And, perhaps trade on the pink sheets under CBCRQ or something similar?

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    • My bad, I have to admit, since I do not own the preferred shares I did not pay much attention to the details on the tender (since the great majority agreed it was dead in the water I really did not want to spend the time reading up on it).

      Now I at least understand the low volume in the common better. I do not blame folks for staying away givent he uncertainty.

    • You're welcome. I think the FDIC would support the plan and might cut CBCR a tiny bit of slack since they are moving ahead rapidly with a plan to raise capital. If CBCR is successful with their standby plan and related capital raise it greatly reduces the risk that the FDIC will need to seize any CBCR banks.

      When the FDIC seizes a bank they typically suffer unreimbursed losses. The FDIC "should" therefore try to be patient with CBCR to the extent possible. Of course we are talking about a bureaucracy so they don't always care about wasting money.

    • Thanks for your kind response. FDIC does not like to seize bank if it could be avoided.(FDIC could have seized CBCR long time ago if they wanted). Shareholders or Creditor got nothing to gain if they do not approve plan, so I think you are not in minority, you are a well thought and astute person. Thanks again 7 with best

    • Yes, if you read the standby plan CBCR, CBCRO and CBCRP would all participate if it is implemented as the company envisions. The plan calls for a recovery of about $3.30 / share on CBCRO / CBCRP in new class C equity (hold caps) and they envision a recovery of about $5 / share after a few years. The plan calls for a recovery of about 36 cents / share on CBCR in new class A & class B equity.

      Of course there are numerous risks that the company can achieve the results they outline in the filing. They could be seized by the FDIC before they can raise capital. They may not be able to raise capital or may be forced to raise capital on less favorable terms than they have envisioned. The new securities might trade for less than they have envisioned. The plan might not be approved by regulators or the court. Some of the stakeholders might object to the plan which would cause a lengthy and expensive court delay and increase the risk of an FDIC seizure.

      I happen to think they'll pull it off, but based on the current prices of CBCR / CBCRO and CBCRP my opinion appears to be in the minority.

    • Thanks lot. Under this CBCR exit/bankruptsy/prepackage plan existing shareholders (both common & Preferred)have significant stakes in new company. This is as I understand (please correct me if I am wrong). I appreciate your help & response. Thanks & with best

    • Sorry, I missed your earlier post. A pre-packaged bankruptcy basically just means that the major parties agree on how to restructure the company in advance of the filing. Existing equity does keep control of the company to preserve the tax loss carry forward assets.

      The main point of a pre-pack is to prevent a long and costly fight in court which happens in many bankruptcies as various stakeholders fight it out. In the case of CBCR and it's stakeholders, it's critical that a long court fight be avoided. CBCR needs to raise capital quickly to reduce the risk of an FDIC seizure and would have difficulty raising capital if there was a lengthy and expensive court fight. It's still a pre-pack even though in this case the equity holders would retain a significant stake in the reorganized company.

    • Please review my earlier post & I shall appreciate your response. Thanks

    • I own CBCRP, what does that mean for me?

    • Imam,

      I think the bfcf big merger will close soon as well as the bbx deal with bbt. After that the rest of bbx probably gets merged as well.

    • Tender offer is for new 6 percent pref not common, if they decide to accept it.

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