Private Equity Firm THL to Buy First BanCorp Common Stock

First BanCorp in San Juan, Puerto Rico, on Tuesday said it struck an agreement under which the private equity firm Thomas H. Lee Partners LP may buy $180 million of its common stock as part of a capital improvement plan.

THL's stock purchase is predicated on First BanCorp selling a total of $500 to $550 million in common stock. The private equity firm would pay $3.50 per share.

First BanCorp also plan to allow existing common shareholders to purchase additional common stock at the same price in a rights offering limited at $35 million of common equity.

Aurelio Aleman, the president and chief executive of First BanCorp, said the deal with THL is a "critical and important step" as it will "strengthen the corporation's balance sheet and capital ratios."

Earlier this month First BanCorp reported a Tier 1 leverage ratio of 7.6% and a total risk-based capital ratio of 11.97% as March 31. Under the May 2010 enforcement action, the bank must raise those ratios to 8% and 12%, respectively.

Following the capital raise and First BanCorp's conversion of about $425 million of preferred stock held by the U.S. Treasury Department into common stock, THL would have about a 24.9% stake in the company.