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8-K - FORM 8-K - CAPITALSOURCE INC | w80782e8vk.htm |
EX-4.1 - EX-4.1 - CAPITALSOURCE INC | w80782exv4w1.htm |
Exhibit 99.1
NEWS
CapitalSource Inc.
CapitalSource Inc.
5404 Wisconsin Avenue
Chevy Chase, MD 20815
Chevy Chase, MD 20815
FOR IMMEDIATE RELEASE
For information contact: |
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Investor Relations:
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Media Relations: | |
Dennis Oakes
|
Michael E. Weiss | |
Senior Vice President Investor Relations
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Director of Communications | |
(212) 321-7212
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(301) 841-2918 |
Amendment to CapitalSource Senior Secured Notes Approved
$150 million Stock Repurchase Plan Announced
$150 million Stock Repurchase Plan Announced
CHEVY CHASE, MD, December 9, 2010 / PRNewswire/ CapitalSource Inc. (NYSE: CSE) today announced
that holders of its 12.75% First Priority Senior Secured Notes due 2014 have approved an amendment
(the Amendment) which creates substantial financial flexibility, including the opportunity to buy
back shares. As a result, the Company announced that its Board authorized the repurchase of up to
$150 million of its common stock over a period of up to two years.
There are four principal components to the Amendment as follows:
| The Company is permitted to use available cash to purchase its convertible debentures redeemable in July 2011 and July 2012; | ||
| The Companys restricted payments capacity, which can be used for share repurchases among other purposes, was increased to approximately $164 million as of September 30, 2010 as a result of modifications to the formulas for calculating restricted payment capacity. The restricted payments formula was revised such that 75% of pre-tax earnings will be added to restricted payment capacity each quarter going forward. | ||
| The Company is permitted to contribute the equity in its remaining four securitizations to CapitalSource Bank. Those securitizations included $1.1 billion of loans and net equity of approximately $235 million as of September 30, 2010. Any such contributions may require regulatory or other approvals not related to the Senior Secured Notes; and | ||
| The Amendment provides added flexibility to leverage assets by allowing the Company to obtain secured debt with a minimum advance rate of 40%, rather than the previous 75% requirement. |
This Amendment accomplishes several important strategic objectives and accelerates our opportunity
to return capital to shareholders in the form of the share buyback announced today, said John K.
Delaney, CapitalSource Executive Chairman. The significant level of excess capital and our strong
liquidity position at the parent company permit us to return capital to shareholders, enhance our
industry leading capital levels at CapitalSource Bank, and position the Company for more rapid EPS
growth.
The Amendment allows us to redeem our outstanding convertible debt with liquidity from our
portfolio rather than through an expensive debt or dilutive equity transaction, commented Donald
F. Cole, CapitalSource Chief Financial Officer. It also provides us with additional flexibility to
utilize the significant amount of cash we expect to generate from the continuing liquidation of our
parent company loan portfolio to reduce our level of excess capital.
Any share repurchases made under the plan announced today will be made through open market
purchases or privately negotiated transactions from time to time for a period of up to two years.
The amount and exact timing of any repurchases will depend upon market conditions and other
factors. There are no assurances the Company will repurchase any shares during the period and the
plan may be suspended or discontinued at any time.
About CapitalSource
CapitalSource Inc. (NYSE: CSE), through its wholly owned subsidiary CapitalSource Bank, provides
financial products nationwide to small and middle market businesses and offers depository products
and services in southern and central California. As of September 30, 2010, CapitalSource had total
assets of $9.6 billion and $4.6 billion in deposits. Visit www.capitalsource.com and
www.capitalsourcebank.com for more information.
Forward Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including certain statements, plans, and expectations regarding
expected cash generation related to the liquidation of our parent company loan portfolio and our
share repurchase program, which are subject to numerous assumptions, risks, and uncertainties. All
statements contained in this release that are not clearly historical in nature are forward-looking,
and the words expect, plan, will, continue, should, would, and similar expressions are
generally intended to identify forward-looking statements. All forward-looking statements involve
risks, uncertainties and contingencies, many of which are beyond our control which may cause actual
results, performance, or achievements to differ materially from anticipated results, performance or
achievements. Actual results could differ materially from those contained or implied by such
statements for a variety of factors, including without limitation: our borrowers may not pay down
their loans in accordance with our expected timing or at all; we may not be able to consummate
sales of certain loans for cash proceeds or at all; we may experience unforeseen liquidity demands;
and other factors described in CapitalSources 2009 Annual Report on Form 10-K and documents
subsequently filed by CapitalSource with the Securities and Exchange Commission. All
forward-looking statements included in this news release are based on information available at the
time of the release. We are under no obligation to (and expressly disclaim any such obligation to)
update or alter our forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable law.