First Foundation Inc. Announces Over $225 Million Equity Investment Anchored by Fortress Investment Group, Canyon Partners, Strategic Value Bank Partners, and North Reef Capital
“We are pleased to anchor this over
Ben Mackovak, Co-Founder and Managing Member of
Transaction Details
In connection with the equity capital raise transaction,
In addition, investors will receive seven-year warrants to purchase a new series of preferred stock, par value
The preferred stock is being issued in connection with the equity capital raise in part due to the fact that the Company does not have a sufficient amount of authorized but unissued shares of common stock under its certificate of incorporation (the “Certificate of Incorporation”) to permit the Company to issue only common shares to the investors. Accordingly, the Company will need the approval of its stockholders, as described in further detail below, in order to amend the Certificate of Incorporation to increase our total authorized shares of common shares and to permit the issuance of an amount of common stock that is 20% or more of the Company’s total common stock in compliance with the rules of the
Each share of Series A preferred stock will automatically convert into 1,000 shares of common stock in the event of a transfer by the holder thereof consistent with the rules and limitations of Regulation Y. Holders of shares of Series A preferred stock will not have the right to vote such shares on any matter submitted to a vote of the stockholders of the Company, other than certain matters expressly permitted by the associated Certificate of Designations, and all of which shares of Series A preferred stock represent the right (on an as converted basis) to receive approximately 29.8 million shares of common stock.
Upon receipt of the Requisite Stockholder Approvals (as defined below), each share of Series B preferred stock will automatically convert into 1,000 shares of common stock. In addition, if the Requisite Stockholder Approvals are not obtained within 210 days of the closing, the investors will receive cash-settled warrants that become exercisable 60 days after issuance (alternatively, these warrants will be cancelled if the Requisite Stockholder Approvals are obtained during such 60-day period). Holders of shares of Series B preferred stock will not have the right to vote such shares on any matter submitted to a vote of the stockholders of the Company, other than certain matters expressly permitted by the associated Certificate of Designations, and all of which shares of Series B preferred stock represent the right (on an as converted basis) to receive approximately 14.5 million shares of common stock.
Each share of Series C preferred stock will automatically convert into 1,000 shares of common stock in the event of a transfer by the holder thereof consistent with the rules and limitations of Regulation Y. The warrants will not be exercisable for 180 days after closing. Holders of shares of Series C preferred stock will not have the right to vote such shares on any matter submitted to a vote of the stockholders of the Company, other than certain matters expressly permitted by the associated Certificate of Designations, and all of which shares of Series C preferred stock represent the right (on an as converted basis) to receive approximately 22.2 million shares of common stock.
The Company will provide customary shelf and piggyback registration rights to each of the investors.
Timing and Approvals
The transaction is expected to close on or around
Matters to be Submitted to Stockholders of the Company
The Company plans to submit to its stockholders for their (a) adoption and approval amendments to the Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock to 200,000,000 (the “Authorized Share Amendment”) and (b) approval of the issuance of shares of common stock in excess of 19.9% of the total voting power of the Company’s securities (the “Share Issuance”) in accordance with the rules of the NYSE (the “Requisite Stockholder Approvals”).
Advisors
Conference Call Details
At
Analysts, investors, and the general public may listen to a discussion of First Foundation’s strategic update call by using the information below:
Via Internet:
The call will be broadcast live over the Internet and can be accessed using the following link: https://events.q4inc.com/attendee/171098569
Via Telephone (For those wishing to participate in the Q & A):
Participants call one of the allocated dial-in numbers (below) and advise the Operator of either the Conference ID 1589646 or Conference Name.
Webcast replay link after call is finished:
The Investor Presentation regarding this transaction will be available on the company's website.
About
Headquartered in
About
About
Founded in 1990, Canyon employs a deep value, credit intensive approach across public and private corporate credit, structured credit, and direct real estate lending and investing. The firm seeks to capture excess returns available to those investors with specialized expertise, rigorous research capabilities, and the ability to underwrite complexity. Canyon invests on behalf of a broad range of institutions globally. For more information visit: www.canyonpartners.com.
About
Forward Looking Statements
This press release may include forward-looking statements by the Company pertaining to such matters as our goals, intentions, and expectations regarding, among other things, the convertibility of the shares of preferred stock and exercisability of the warrants issued in connection with this capital raise transaction; the Company’s seeking (and the Company’s ability to obtain) approval of its stockholders of any necessary amendments of the Company’s organizational documents or approvals of the issuance of shares of common stock or preferred stock in connection with this capital raise transaction; receipt of any required regulatory approvals or non-objections in connection with this capital raise transaction or the appointment of directors or senior management; revenues, earnings, loan production, asset quality, capital levels, and acquisitions, among other matters; our estimates of future costs and benefits of the actions we may take; our assessments of probable losses on loans; our assessments of interest rate and other market risks; and our ability to achieve our financial and other strategic goals.
Forward-looking statements are typically identified by such words as “believe,” “expect,” “anticipate”, “intend,” “outlook,” “estimate,” “forecast,” “project,” “should,” and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. Additionally, forward-looking statements speak only as of the date they are made; the Company does not assume any duty, and does not undertake, to update our forward-looking statements. Furthermore, because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in our statements, and our future performance could differ materially from our historical results.
The forward-looking statements in this release are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this release and could cause us to make changes to our future plans. Those risks and uncertainties include, but are not limited to, the risk of incurring credit losses, which is an inherent risk of the banking business; the quality and quantity of our deposits; adverse developments in the financial services industry generally such as bank failures and any related impact on depositor behavior or investor sentiment; risks related to the sufficiency of liquidity; risk that we will not be able to maintain growth at historic rates or at all; the risk that we will not be able to access the securitization market on favorable terms or at all; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; risks associated with changes in interest rates, which could adversely affect our interest income, interest rate margin, and the value of our interest-earning assets, and therefore, our future operating results; the risk that the performance of our investment management business or of the equity and bond markets could lead clients to move their funds from or close their investment accounts with us, which would reduce our assets under management and adversely affect our operating results; negative impacts of news or analyst reports about us or the financial services industry; the impacts of inflation on us and our customers; results of examinations by regulatory authorities and the possibility that such regulatory authorities may, among other things, limit our business activities or our ability to pay dividends, or impose fines, penalties or sanctions; the risk that we may be unable or that our board of directors may determine that it is inadvisable to pay future dividends at historic levels or at all; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships.
Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in our Annual Report on Form 10-K for the fiscal year ended
Important Information and Where You Can Find It
This press release may be deemed to be solicitation material in respect of the Requisite Stockholder Approvals. In connection with the Requisite Stockholder Approval,
INVESTORS AND SECURITY HOLDERS OF FIRST FOUNDATION AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN AVAILABLE, THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT FIRST FOUNDATION AND THE TRANSACTION.
investors and security holders will be able to obtain a free copy of the proxy statement, as well as other relevant documents filed with the
Participants in the Solicitation of Proxies in Connection with Proposed Transaction
Not an Offer of Securities
The information in this communication is for informational purposes only and shall not constitute, or form a part of, an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities. The securities that are the subject of the private placement have not been registered under the Securities Act and may not be offered or sold in
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