UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 23, 2010
W HOLDING COMPANY, INC.
(Exact name of registrant as specified in its charter)
Puerto Rico | 000-27377 | 66-0573197 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) | ||
19 West McKinley Street, Mayaguez, Puerto Rico | 00680 | |||
(Address of principal executive offices) | (Zip code) |
Registrants telephone number, including area code: (787) 834-8000
Not Applicable
(Former name or former address, if changed since last report)
(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:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment
of Certain Officers; Compensatory Arrangements of Certain Officers.
Effective April 23, 2010, Mr. Frank C. Stipes, Esq., resigned as Chief Executive Officer and
President of W Holding Company, Inc.s (the Company) wholly owned subsidiary, Westernbank Puerto
Rico (the Bank). Mr. Stipes has taken this step so he can devote his full time and effort to
executing the Companys capital plan to raise significant new equity capital for investment in the
Bank. Mr. Stipes will continue to serve as Chairman of the Board of Directors of each of the
Company and the Bank and as the President and Chief Executive Officer of the Company.
Subject to receipt of regulatory approval, the Board of Directors of the Company has appointed
Andres Morgado, age 51, as the interim President and Chief Executive Officer of the Bank. Mr.
Morgado, a certified public accountant, has served as President of Westernbank Trust Division since
August 2000.
There are no arrangements or understandings between Mr. Morgado and any other person pursuant to
which Mr. Morgado would be promoted to serve as interim President and Chief Executive Officer of
the Bank. There are no family relationships between Mr. Morgado and any director or executive
officer of the Company. There has been no transaction nor are there any proposed transactions
between the Company and Mr. Morgado that would require disclosure pursuant to Item 404(a) of
Regulation S-K.
In connection with his promotion, subject to regulatory approval, Mr. Morgados proposed annual
base salary has been established at $500,000.
The terms of Mr. Morgados Payment Agreement in the Event of Change in Control, filed as Exhibit
10.6 to the Companys Annual Report on Form 10-K for the period ended December 31, 2002, have not
been amended. However, the ability of the Company or Bank to make any payment to Mr. Morgado under
the Payment Agreement in the Event of Change in Control would be subject to regulatory approval.
The ability of the Company or Bank to amend that Payment Agreement in the Event of Change in
Control, or to enter into any new change in control or severance agreement with any party, would
also be subject to regulatory approval. At Mr. Stipes
request, his annual compensation has been reduced to $382,000, as it was when he held these same positions in 2005, adjusted by a cost of living adjustment of 3.5% a year, from 2007 to this date.
Item 8.01 Other Events.
We have determined that we need significant additional sources of capital in order to continue
operations through 2010 and beyond. Additionally, our regulators have questioned the ability of
the Bank to operate in a safe and sound manner, and we understand that they are likely to direct
significant further reserves for losses, and are exploring alternatives for resolution. We believe
that if there is any chance to forestall such action, at a minimum, the Bank needs to raise
significant equity capital on an immediate basis.
The Board of Directors of the Company also has approved and appointed a special committee of
independent directors (the Special Committee) consisting of Enrique Gonzalez, Robert Stolberg
Acosta and Alberto Bacó to determine the terms by which the Company would be recapitalized through
an exchange of all outstanding preferred stock for company common stock by way of statutory merger.
The Special Committee will evaluate and recommend to the Board of Directors, in consultation with
its financial and legal advisors, the terms for this recapitalization.
Management has engaged financial advisors to assist in our efforts to raise additional capital, as
well as to explore other strategic alternatives. There can be no assurance that we will be able to
successfully raise sufficient equity capital. In addition, any transaction involving equity
financing
would result in substantial dilution to current stockholders and may adversely affect the
price of the Companys common stock.
The Banks regulators at any time may take other and further actions, including placing the Bank
into conservatorship or receivership, to protect the interests of depositors insured by the FDIC.
If a receivership were to occur, the Banks assets would likely be liquidated, including a sale of
such assets to another institution, and it would be highly likely that the Company would be
required to cease operations and liquidate or seek bankruptcy protection. If the Company were to
liquidate or seek bankruptcy protection, we do not believe that there would be any assets available
to the holders of common stock of the Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
W HOLDING COMPANY, INC. (Registrant) |
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/s/ Lidio V. Soriano |
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Title: Chief Financial Officer |
Date: April 25, 2010