New York Community Bancorp, Inc. (NYCB) recently completed transactions resulting in investments totaling approximately $1.05 billion by strategic investors Liberty Strategic Capital, funds managed by Hudson Bay Capital Management, funds managed by Reverence Capital Partners, and other investors. This major equity raise indicates the confidence expressed by these investors in the ongoing turnaround at NYCB.
As a result of the transactions, NYCB issued 76,630,965 shares of common stock at a price per share of $2.00, 192,062 shares of a new series of noncumulative convertible preferred stock (Series B), and 256,307 shares of a new series of noncumulative convertible preferred stock (Series C), both at a price per share of $2,000. Additionally, warrants were issued affording the holder the right to purchase shares of a new class of non-voting, common-equivalent preferred stock of the company.
If all shares are converted into common stock, the company will issue a total of approximately 525 million shares of common stock, with the investors owning approximately 39.6% of the company on a fully diluted basis. Furthermore, NYCB plans to submit to its stockholders for adoption and approval amendments to the certificate of incorporation to effect at least a 1-3 reverse stock split of its common stock and increase the number of authorized shares of the company's common stock to at least 1,700,000,000.
In connection with the commencement of his employment with NYCB, the company has granted employment inducement awards to Joseph Otting, including an option to acquire 15,000,000 shares of the company’s common stock, with an exercise price of $2.00 per share, vesting in 12 quarterly installments commencing on March 6, 2024, with accelerated vesting upon a change in control of the company prior to the final vesting date.
NYCB's financial advisor and sole placement agent for these transactions is Jefferies LLC, with legal counsel provided by Skadden, Arps, Slate, Meagher & Flom LLP, Sullivan & Cromwell LLP, and Schulte Roth & Zabel LLP.
At the end of December 31, 2023, NYCB had $113.9 billion of assets, $85.8 billion of loans, deposits of $81.4 billion, and total stockholders’ equity of $8.4 billion. Flagstar Bank, N.A., a subsidiary of NYCB, operates 420 branches primarily in the northeast and midwest, with market-leading positions in several national businesses, including multi-family lending, mortgage origination and servicing, and warehouse lending.
Liberty Strategic Capital, one of the strategic investors, is a Washington, D.C.-based private equity firm focused on strategic investments in technology, financial services, and fintech, led by Steven T. Mnuchin, the 77th Secretary of the Treasury.
Hudson Bay Capital Management, another investor, is a global investment management firm operating in several locations including Greenwich, New York, Miami, Boston, London, and Dubai, while Reverence Capital Partners, also an investor, is a private investment firm focused on financial services-focused private equity, opportunistic, structured credit, and real estate solutions.
As a result of these announcements, the company's shares have moved -1.7% on the market, and are now trading at a price of $3.69. Check out the company's full 8-K submission here.
