Atlantic Capital Bancshares in Atlanta plans to issue $50 million in subordinated debt to finance its acquisition of First Security Group in Tennessee.
The $1.4 billion-asset Atlantic will use proceeds from the private placement to fund $47 million of the total cash consideration of $55 million. Atlantic agreed to pay a total of $160 million to purchase the $1.1 billion-asset FSG in Chattanooga, Tenn.
Terms of the acquisition for FSGBank's holding company, first announced in March, were amended in June. Atlantic will pay between 30% and 35% in cash and the remainder in stock, as opposed to the original outlay of 40% in cash and 60% in stock.
"It was clear there was substantial interest [from FSG shareholders] in holding stock rather than receiving cash," Douglas Williams, Atlantic Capital's chief executive, said in an interview. "We decided a fairly modest adjustment would put more stock in their hands and reduce cash consideration, as well as strengthen capital ratios for the combined company."
The FSG deal is still expected to close in the fourth quarter.
Atlantic Capital will issue notes carrying a fixed rate of 6.25% until September 2020. The notes will then switch to a floating rate equal to Libor plus 4.68 percentage points until 2025. Pinnacle did not identify the institutional investors involved with the debt sale. The debt issuance is expected to close on Sept. 28.
U.S. Bancorp Investments and Macquarie Capital are placement agents on the debt sale. Womble Carlyle Sandridge & Rice is legal counsel.