Guaranty Financial Group Inc. (NYSE: GFG) ("Guaranty") announced today that it has entered into private placement agreements with several investors to receive a capital infusion that, when added to the $38.4 million investment by TRT Financial Holdings, LLC on May 30, 2008, will result in total gross proceeds raised of approximately $600 million.
The agreements call for Guaranty to issue 5.54 million shares, in the aggregate, of a series of convertible perpetual cumulative preferred stock (the "Convertible Preferred Stock"), for $51.70 per share, for an aggregate purchase price of approximately $287 million. Approval by Guaranty's stockholders is required before the conversion feature of the Convertible Preferred Stock can be exercised. Each share of Convertible Preferred Stock will automatically convert into 10 shares of Guaranty common stock after stockholder approval and necessary regulatory approvals are received.
A separate agreement has also been entered into with several investors to purchase, for an aggregate purchase price of $275 million, units comprising subordinated debt to be issued by Guaranty Bank and, in the aggregate, 638,000 shares of Convertible Preferred Stock ("Units").
Current Guaranty shareholders Robert Rowling, acting through TRT Financial Holdings, LLC, and Icahn Capital LP, and affiliated entities, have agreed to purchase significant amounts of both the Convertible Preferred Stock and Units. Other current Guaranty shareholders and new investors are purchasing significant amounts of these securities as well. The transactions are subject to approval by the Office of Thrift Supervision, and other conditions to closing.
"We are excited that our investment will assist Guaranty in its efforts to work through current market conditions, and provide Guaranty the ability to continue to work toward their long-term plans," stated Mr. Carl Icahn, Chairman of Icahn Capital LP.
"These agreements complete a very significant step toward fortifying our balance sheet and supporting Guaranty's long-term potential," stated Mr. Ken Dubuque, President and Chief Executive Officer of Guaranty. "We are pleased to have the support of our largest current shareholders, as well as that of new investors."
Keefe, Bruyette & Woods, Inc. acted as placement agent to Guaranty in connection with the private placements.
Guaranty has previously announced a rights offering of common stock to its stockholders, and previously announced the close of business on June 17, 2008, or such later date as its registration statement relating to the proposed rights offering is declared effective by the Securities and Exchange Commission, as the record date for Guaranty's proposed rights offering. Keefe, Bruyette & Woods, Inc. is expected to act as dealer manager in the rights offering.
A registration statement relating to the securities offered in the rights offering has been filed with the Securities and Exchange Commission but has not yet become effective. The common stock may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.
About Guaranty Financial Group Inc.
Guaranty Financial Group Inc. is the second largest publicly-traded financial institution holding company headquartered in Texas and one of the 50 largest publicly-traded financial institution holding companies based in the U.S. ranked by asset size. Guaranty Financial Group operates Guaranty Bank, which engages in consumer and business banking activities through a network of more than 150 banking centers in Texas and California. Guaranty Bank also provides financing to middle market companies, independent energy producers, and the real estate industry. Additionally, Guaranty Bank operates an insurance agency, Guaranty Insurance Services, Inc.
Some statements made in this news release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by their use of terms and phrases such as "believe,""anticipate," "could,""estimate," "likely,""intent," "may,""plan," "expect," and similar expressions, including references to assumptions or our plans and goals. Readers should not place undue reliance on these forward- looking statements. These forward-looking statements involve risks and uncertainties. Guaranty's actual results or performance may differ materially from those suggested, expressed, or implied by forward-looking statements due to a wide range of factors including, but not limited to: general economic, market, or business conditions; demand for new housing; competitive actions by other companies; changes in laws or regulations and actions or restrictions of regulatory agencies; deposit attrition, customer loss, or revenue loss in the ordinary course of business; cost or difficulties related to becoming a stand-alone public company; the inability to realize elements of our strategic plans; changes in the interest rate environment that expand or reduce margins or adversely affect critical estimates and projected returns on investments; economic conditions affecting real estate values and oil and gas prices and changes in market and/or general economic conditions, either nationally or regionally, that are less favorable than expected; natural disasters in primary market areas that may result in prolonged business disruption or materially impair the value of collateral securing loans; assumptions and estimates underlying critical accounting policies, particularly allowance for credit losses, may prove to be materially incorrect or may not be borne out by subsequent events; current or future litigation, regulatory investigations, proceedings or inquiries; strategies to manage interest rate risk may yield results other than those anticipated; a significant change in the rate of inflation or deflation; changes in the securities markets; the ability to complete merger, acquisition or divestiture plans; regulatory or other limitations imposed as a result of a merger, acquisition or divestiture; and the success of our business following a merger, acquisition or divestiture; the final resolutions or outcomes with respect to our contingent and other corporate liabilities related to our business and any related actions for indemnification made pursuant to the separation and distribution agreement between us and Temple-Inland Inc. Other risks are detailed in our Annual Report on Form 10-K for the year ended December 31, 2007, our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2008, and other reports filed with the Securities and Exchange Commission. Readers may access our reports filed with the Securities and Exchange Commission at www.sec.gov. Guaranty disclaims any obligation to subsequently revise or update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.