Naugatuck Valley Mutual Holding Co. in Connecticut has joined a growing list of companies planning second-step conversions.
The company's chief executive officer, John Roman, said the conversion plan, announced Tuesday, would provide capital for its subsidiary, the $542 million-asset Naugatuck Valley Financial Corp., to acquire Southern Connecticut Bancorp Inc. of New Haven for roughly $19.5 million. The deal is contingent on the parent company's conversion from a mutual holding company to a stock holding company.
Naugatuck Valley Mutual will sell its roughly 60% ownership in Naugatuck Valley Financial in a subscription offering. Stockholders in Naugatuck Valley Financial, who own about 40% of the outstanding common stock, would receive shares of the new stock holding company based on an exchange ratio designed to preserve their 40% ownership.
Kip Weissman, a partner at Luse Gorman Pomerenk & Schick PC, said pent-up demand and a need for capital have opened up the market for such conversions. At least half a dozen conversions have been announced or completed since December.