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8-K - LIVE FILING - FIRST BANCORP /PR/ | htm_39951.htm |
FIRST BANCORP RECEIVES AND REJECTS UNSOLICITED PROPOSAL FROM DORAL
SAN JUAN, Puerto Rico December 6, 2010 First BanCorp (the Corporation) [NYSE:FBP], [NYSE:FBPPrA], [NYSE:FBPPrB], [NYSE:FBPPrC], [NYSE:FBPPrD], [NYSE:FBPPrE], announced today its rejection of an unsolicited acquisition proposal received from Doral Financial Corporation (Doral). On December 2, 2010, the Corporation received a letter from Doral proposing a stock-for-stock exchange valued at $0.30 for each share of the Corporations common stock. Dorals proposal contemplates that it will raise $550 million prior to transaction closing and reach a new agreement with the U.S. Treasury to exchange the Corporations Series G Preferred Stock the U.S. Treasury currently holds into shares of common stock of the combined company at a discount. The Corporations Board of Directors concluded that the acquisition proposal received from Doral is not in the best interest of the Corporation and its stockholders.
Aurelio Alemán, President and Chief Executive Officer of First BanCorp, said After consideration, the Board of Directors unanimously decided not to pursue the Doral proposal. We believe it is in the best interest of the Corporation and its stockholders to continue the execution of our previously announced capital plan, including the raising of $350 million of common equity in a public offering and the conversion into common stock of the Series G Preferred Stock, held by the U.S. Treasury. We maintain our focus on the implementation of our business strategies, while providing superior customer service to our clients.
The Corporation recently announced that the U.S. Treasury, which owns $424 million of First BanCorps Series G Preferred Stock, has reduced from $500 million to $350 million the size of the capital raise required to satisfy the remaining substantive condition to the Corporations ability to compel the conversion of the Series G Preferred Stock into shares of common stock.
About First BanCorp
First BanCorp is the parent corporation of FirstBank Puerto Rico, a state-chartered commercial bank
with operations in Puerto Rico, the Virgin Islands and Florida, and of FirstBank Insurance Agency.
First BanCorp and FirstBank Puerto Rico all operate within U.S. banking laws and regulations. The
Corporation operates a total of 170 branches, stand-alone offices and in-branch service centers
throughout Puerto Rico, the U.S. and British Virgin Islands, and Florida. Among the subsidiaries of
FirstBank Puerto Rico are First Federal Finance Corp., a small loan company; FirstBank Puerto Rico
Securities, a broker-dealer subsidiary; First Management of Puerto Rico; and FirstMortgage, Inc., a
mortgage origination company. In the U.S. Virgin Islands, FirstBank operates First Insurance VI, an
insurance agency, and First Express, a small loan company. First BanCorps common and publicly-held
preferred shares trade on the New York Stock Exchange under the symbols FBP, FBPPrA, FBPPrB,
FBPPrC, FBPPrD and FBPPrE. Additional information about First BanCorp may be found at
www.firstbankpr.com.
Safe Harbor
This press release may contain forward-looking statements concerning the Corporations future
economic performance. The words or phrases expect, anticipate, look forward, should,
believes and similar expressions are meant to identify forward-looking statements within the
meaning of Section 27A of the Private Securities Litigation Reform Act of 1995, and are subject to
the safe harbor created by such section. The Corporation wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of the date made, and
to advise readers that various factors, including, but not limited to, uncertainty as to whether
the Corporation will be able to issue $350 million of equity so as to meet the remaining
substantive condition necessary to compel the U.S. Treasury to convert into common stock the shares
of Series G Preferred Stock that the Corporation issued to the U.S. Treasury; uncertainty about
whether the Corporation will be able to fully comply with the written agreement dated June 3, 2010
that the Corporation entered into with the Federal Reserve Bank of New York (the FED) and the
order dated June 2, 2010 (the Order) that the Corporation and FirstBank Puerto Rico entered into
with the Federal Deposit Insurance Corporation (the FDIC) and the Office of the Commissioner of
Financial Institutions of Puerto Rico (OCIF) that, among other things, require the Corporation to
attain certain capital levels and reduce its special mention, classified, delinquent and
non-accrual assets; uncertainty as to whether the Corporation will be able to complete future
capital-raising efforts; uncertainty as to the availability of certain funding sources, such as
retail brokered certificates of deposit; the risk of not being able to fulfill the Corporations
cash obligations or pay dividends to its shareholders due to its inability to receive approval from
the FED to receive dividends from FirstBank Puerto Rico; the risk of being subject to possible
additional regulatory actions; the strength or weakness of the real estate markets and of the
consumer and commercial credit sectors and their impact on the credit quality of the Corporations
loans and other assets, including the Corporations construction and commercial real estate loan
portfolios, which have contributed and may continue to contribute to, among other things, the
increase in the levels of non-performing assets, charge-offs and the provision expense and may
subject the Corporation to further risk from loan defaults and foreclosures; adverse changes in
general economic conditions in the United States and in Puerto Rico, including the interest rate
scenario, market liquidity, housing absorption rates, real estate prices and disruptions in the
U.S. capital markets, which may reduce interest margins, impact funding sources and affect demand
for all of the Corporations products and services and the value of the Corporations assets; the
Corporations reliance on brokered certificates of deposit and the Corporations ability to obtain,
on a periodic basis, approval to issue brokered certificates of deposit to fund operations and
provide liquidity in accordance with the terms of the Order; an adverse change in the Corporations
ability to attract new clients and retain existing ones; a decrease in demand for the Corporations
products and services and lower revenues and earnings because of the continued recession in Puerto
Rico and the current fiscal problems and budget deficit of the Puerto Rico government; a need to
recognize additional impairments on financial instruments or goodwill relating to acquisitions;
uncertainty about regulatory and legislative changes for financial services companies in Puerto
Rico, the United States and the U.S. and British Virgin Islands, which could affect the
Corporations financial performance and could cause the Corporations actual results for future
periods to differ materially from prior results and anticipated or projected results; uncertainty
about the effectiveness of the various actions undertaken to stimulate the United States economy
and stabilize the United States financial markets, and the impact such actions may have on the
Corporations business, financial condition and results of operations; changes in the fiscal and
monetary policies and regulations of the federal government, including those determined by the
Federal Reserve System, the FDIC, government-sponsored housing agencies and local regulators in
Puerto Rico and the U.S. and British Virgin Islands; the risk of possible failure or circumvention
of controls and procedures and the risk that the Corporations risk management policies may not be
adequate; the risk that the FDIC may further increase the deposit insurance premium and/or require
special assessments to replenish its insurance fund, causing an additional increase in the
Corporations non-interest expense; risks of not being able to generate sufficient income to
realize the benefit of the deferred tax asset; risks of not being able to recover the assets
pledged to Lehman Brothers Special Financing, Inc.; changes in the Corporations expenses
associated with acquisitions and dispositions; the adverse effect of litigation; developments in
technology; risks associated with further downgrades in the credit ratings of the Corporations
long-term senior debt; general competitive factors and industry consolidation; risks associated
with the depression of the price of the Corporations common stock, including the possibility of
the Corporations common stock being delisted from the New York Stock Exchange; and the possible
future dilution to holders of common stock resulting from additional issuances of common stock or
securities convertible into common stock. The Corporation does not undertake, and specifically
disclaims any obligation, to update any forward-looking statements to reflect occurrences or
unanticipated events or circumstances after the date of such statements.
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First BanCorp
Alan Cohen
Senior Vice President
Marketing and Public Relations
alan.cohen@firstbankpr.com
787.729.8256