A month after holders of trust-preferred securities scoffed at a heavily discounted exchange, Pacific Capital Bancorp in Santa Barbara, Calif., has agreed to raise its offer.

On Tuesday the parent company of the $7.4 billion-asset Pacific Capital Bank doubled its cash exchange offer to bondholders from 20 cents to 40 cents on the dollar of its trust-preferred securities and increased its subordinated debt exchange from 30 cents to 65 cents on the dollar.

Pacific Capital also extended the deadline to June 30. On April 29 it announced a deal with an affiliate of Ford Financial Fund LP for a $500 million capital injection.

For the deal to close, Pacific Capital had said it would reduce its debt, including having the Treasury convert $180 million of its Troubled Asset Relief Program investment into $36 million worth of common stock at an 80% discount.

That offer was opposed, most vocally by the New York hedge fund Hildene Capital Management LLC, which rejected the proposal in a May 10 letter to Pacific Capital, saying it would be dilutive to holders compared with the par value of the securities.

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