Deal amended with higher cash injection, revised stock swap ratio
FirstSun Capital and HomeStreet have mutually agreed to amend their previously announced merger deal, increasing FirstSun's total equity capital raise related to the deal by $60 million.
The revised agreement now involves an increased equity capital target for FirstSun, boosting the total from $175 million to up to $235 million. Additionally, the stock exchange ratio has been adjusted to 0.3867 shares of FirstSun common stock for each HomeStreet share, valuing each HomeStreet share at $13.53 based on FirstSun’s closing price as of April 29.
The updated terms also lower the termination fee HomeStreet would pay if it opts for a competing acquisition proposal within 30 days post-amendment to $2.6 million, along with covering the reimbursement of FirstSun’s transaction fees and expenses.
The merged entity plans to operate under a Texas state charter, transitioning FirstSun’s subsidiary, Sunflower Bank, from a national bank to a state-chartered bank, which will also seek membership in the Federal Reserve System.
As part of the merger, FirstSun will issue $48.5 million in subordinated debt, with proceeds enhancing Sunflower Bank's capital. Concurrently, HomeStreet will start disposing of or selling about $300 million in specific commercial real estate loans.
The necessary regulatory nods now come from the Federal Reserve Board and the Texas Department of Banking after the initial application with the Office of the Comptroller of the Currency (OCC) was withdrawn.
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“We greatly appreciate the long history we have had with the OCC, including the supervisory staff in our local markets who have been great partners over the years, and we look forward to working with the Texas Department of Banking and the Federal Reserve Bank of Dallas as we continue to grow our presence in the State of Texas,” Neal Arnold, CEO of FirstSun and Sunflower Bank, said in a media release.
“We continue to believe FirstSun is the right partner, and we are working well with the FirstSun team to remain focused on ensuring an effective integration and a seamless conversion of systems,” said HomeStreet CEO Mark Mason.
The amended deal now requires approvals from the Federal Reserve Board and Texas Department of Banking, withdrawing the previous Office of the Comptroller of the Currency application.
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