Attached files
| file | filename |
|---|---|
| 8-K - CASCADE BANCORP | v164016_8k.htm |
| EX-10.1 - CASCADE BANCORP | v164016_ex10-1.htm |
| EX-10.2 - CASCADE BANCORP | v164016_ex10-2.htm |
| EX-99.2 - CASCADE BANCORP | v164016_ex99-2.htm |
| EX-99.1 - CASCADE BANCORP | v164016_ex99-1.htm |
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Cira
Centre
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2929
Arch Street, 17th Floor
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Philadelphia,
PA 19104
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T 215 701 9555 F 215 701
8282
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135
East 57th Street, 21st Floor
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New
York, NY 10022
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T 646 673 8000 F
646 673
8100
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www.cohenandcompany.com
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Private and
Confidential
October
26, 2009
Samuel
Hillier
Cohen
& Company Financial Management, LLC
2929 Arch
Street, 17th
Floor
Philadelphia,
PA 19104
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RE:
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Cascade Bancorp Trust
Preferred Securities Exchange
Offer
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Dear Mr.
Hillier:
As you
are aware, Cohen & Company Securities, LLC has been engaged by Cascade
Bancorp (“Cascade” and/or the “Company”) to act as exclusive advisor to the
Company in connection with a restructuring and/or an exchange of its trust
preferred securities held in collateralized debt obligations under your
management (the “Alesco CDOs”) having an aggregate principal amount of
$66,500,000 (the “TPS”) according to the following schedule:
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Trust Name
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Principal Amount
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Alesco CDO
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Cascade
Bancorp Trust I
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$ | 20,000,000 |
Alesco
Preferred Funding VI
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Cascade
Bancorp Statutory Trust II
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$ | 13,250,000 |
Alesco
Preferred Funding X
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Cascade
Bancorp Statutory Trust III
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$ | 13,250,000 |
Alesco
Preferred Funding X
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Cascade
Bancorp Statutory Trust IV
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$
$
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10,000,000
10,000,000
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Alesco
Preferred Funding XI
Alesco
Preferred Funding
XIV
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||
As you
may be aware, the Company has lost in excess of $166 million over the past 6
quarters and is currently in deferral on the TPS. In addition, the Company’s
primary operating subsidiary, Bank of the Cascades (the “Bank”), entered into a
Cease and Desist (“C&D”) order with both the FDIC and the Oregon Division of
Finance and Corporate Securities on August 27, 2009. Among other things, this
C&D requires that the bank achieve a Tier 1 Leverage Ratio of 10% within 150
days of said agreement.
As a
result of the aforementioned losses and C&D requirements, the Company is
pursuing an equity capital raise (“Capital Raise”) and has filed a corresponding
registration statement. We believe that the success of this Capital Raise and in
all reality, the future viability of the Company, is contingent upon the
execution of a restructuring and/or an exchange of the TPS.
Cohen
& Company Financial Management, LLC
October
26,
2009
Page
2
To this
end, the Trust Preferred Exchange Term Sheet attached hereto as Annex A details the
transaction we propose for Cascade to purchase the TPS from the respective
Alesco CDOs (the “Proposed Transaction”). We believe the Proposed Transaction is
fair and provides your investors with the potential for a 20% overall recovery,
which is materially higher than your current carrying value and we believe,
markedly higher than what you are likely to receive if the Company cannot raise
additional capital.
Please
note that consummation of the Proposed Transaction will require Cohen &
Company Financial Management, LLC (the “Collateral Manager”), and the affected
Alesco CDOs under its management, to transfer to the Company all rights and
title to, and interest in, the TPS. Furthermore, by entering into the Proposed
Transaction, the Collateral Manager will acknowledge all obligations under all
of the TPS shall be deemed fully discharged and that neither it nor its affected
Alesco CDOs shall receive or have any claim for any future, deferred, or past
due payments on the TPS and accrued or penalty interest thereon, whether or not
any of such payments are due or accrued or unpaid. Lastly, the Collateral
Manager and its affected Alesco CDOs will also release Cascade and any and all
officers, directors, affiliates and subsidiaries from any claims whatsoever
relating to, in connection with, or arising out of the Alesco CDOs’ investments
in the TPS.
The
Collateral Manager represents and warrants that it has the requisite power and
authority to enter into this letter agreement and perform its obligations
hereunder.
Each of
Cascade and the Collateral Manager hereby represents and warrants that it has
not, nor any person acting on any of their behalf have engaged, or will engage,
in any form of “general solicitation or general advertising” (within the meaning
of Regulation D under the Securities Act of 1933, as amended) in connection with
any offer or sale of the TPS.
Each of
Cascade and the Collateral Manager hereby represents and warrants that this
letter agreement constitutes the legal, valid and binding obligation of each of
them, enforceable against each of them, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and to general
principals of equity.
Please
indicate your agreement with the foregoing terms of the Proposed Transaction by
signing below and returning to us the enclosed duplicate of this document,
whereupon this document and your acceptance shall represent a binding agreement
between Cohen & Company Financial Management, LLC, as Collateral Manager,
and Cascade Bancorp.
[Signature
page follows.]
Cohen
& Company Financial Management, LLC
October
26,
2009
Page
3
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Very
truly yours,
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COHEN
& COMPANY SECURITIES,
LLC
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By:
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/s/ Christopher Ricciardi |
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Name:
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Christopher Ricciardi |
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Title:
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CEO |
AGREED
AND ACCEPTED AS OF
___________________,
2009
COHEN
& COMPANY FINANCIAL MANAGEMENT, LLC, AS COLLATERAL
MANAGER
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By:
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/s/ Kenneth R. Smith |
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Name:
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/s/ Kenneth R. Smith |
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Title:
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CCO
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AGREED
AND ACCEPTED AS OF
October 23, 2009
CASCADE
BANCORP
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By:
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/s/ G.D. Newton |
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Name:
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G.D. Newton |
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Title:
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EVP/CFO |
Cohen
& Company Financial Management, LLC
October
26,
2009
Page
4
Annex
A
Trust
Preferred Exchange Term Sheet
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Privileged
and Confidential
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Securities
Subject to Offer
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Cascade
Bancorp Trust I ($20,000,000), Cascade Bancorp Statutory Trust II
($13,250,000), Cascade Bancorp Statutory Trust III ($13,250,000), and
Cascade Bancorp Statutory Trust IV ($20,000,000).
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Consideration
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Mandatorily
redeemable Senior Notes (“Notes”) with an aggregate original principal
balance of $13,300,000, representing 20% of the original principal balance
of the TPS. The Notes will be issued in certificated form to the Alesco
CDOs in transactions exempt from registration under the Securities Act of
1933, as amended.
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Senior
Notes Interest Rate
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7.5%
fixed per annum
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Senior
Notes Interest Accrual
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Interest
on the Notes shall begin accruing on the latter of January 1, 2010 or the
date of closing on the basis of 360-day year composed of twelve 30-day
months.
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Payment
Frequency
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Quarterly
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Payment
Dates
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3/15,
6/15, 9/15 and 12/15, commencing on 3/15/2010
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Redemption
Triggers
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The
Company shall redeem the Notes for cash upon the fifth day following the
closing of a Capital Raise.
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Senior
Notes Maturity
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Five
years from date of closing.
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Closing
of Transaction
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One
day prior to the pricing of the Company’s Capital Raise. It is currently
anticipated that the pricing of the Company’s Capital Raise will occur on
or before June 30, 2010.
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Regulatory
Approval
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Consummation
of the Proposed Transaction is subject to prior approval by the Company’s
and the Bank’s primary state and Federal Regulators.
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Expenses
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Each
party shall be responsible for its own expenses relating to the Proposed
Transaction, including, but not limited to, the fees and expenses of
its own legal counsel.
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Governing
Law
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All
documents will be governed by New York law.
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Completion
of Transaction
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Each
of the Company and the Collateral Manager hereby agrees to take such
action or execute such documents reasonably necessary or desirable to
complete the Proposed
Transaction.
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