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Supervisory “Concerns” with Shareholder Protection Arrangements

February 9, 2016

Authors

Robert Klingler

Supervisory “Concerns” with Shareholder Protection Arrangements

February 9, 2016

by: Robert Klingler

In December 2015 (following years of sporadic and seemingly random criticism) of shareholder protection arrangements, the Board of Governors of the Federal Reserve System issued guidance that the Federal Reserve “may” object to a shareholder protection agreement based on the facts and circumstances and the features of the particular arrangement.  Federal Reserve Supervisory Letter SR 15-15 does not require submission of such arrangements to the Federal Reserve for comment prior to implementation, but rather directs institutions considering the implementation or modification of such arrangements to “review this guidance to help ensure that supervisory concerns are addressed.”

Supervisory Letter SR 15-15 casts a long shadow, with little clarity as to the line between acceptable and unacceptable arrangements. SR 15-15 cites a wide array of potentially objectionable shareholder protection arrangements, but then indicates that supervisory staff has “in some instances” found that these arrangements would “have negative implications on a holding company’s capital

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Brand Group Holdings, Inc. Announces Successful Recapitalization

May 11, 2011

Authors

Bryan Cave

Brand Group Holdings, Inc. Announces Successful Recapitalization

May 11, 2011

by: Bryan Cave

In its press release issued on May 4, 2011, Bryan Cave client Brand Group Holdings, Inc. (the “Company”) announced the successful completion of its recapitalization.  The total amount raised in the initial phase of this effort was $125 million, and the three largest investors in the recapitalization, affiliates of The Carlyle Group, The Stephens Group, and the Cousins’ family, invested approximately $96 million, with various other investors investing approximately $29 million.  The investors have agreements in place with the Company to invest an additional $75 million in capital at a later date.

A unique feature of this transaction is a valuation adjustment that utilizes a stock escrow arrangement.   Some of the purchased shares will revert from the new investors to the legacy shareholders if the existing loan portfolio performs better than the investors have projected.

As a result of the recapitalization, the Company is among the best capitalized financial

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