Second National to Restructure Paper
ANNAPOLIS, Md. - Second National Federal Savings Bank, a unit of Second National Bancorp., said it received preliminary approval from the Office of Thrift Supervision for a favorable restructuring of $12 million in subordinated debentures.
Second National said a consortium of insurance companies represented by Washington Square Capital Inc. will receive $8.5 million in 9.5% noncumulative convertible preferred stock. The remaining $3.5 million of debentures is to be prepared at par.
In exchange, the insurance companies agree to cancel $12 million in 14.5% subordinated debentures.
Second National said the preferred stock carries a 9.5% dividend rate until February 1995. The rate then rises to 10.5% until February 1997, when it rises to 11.5%.
Although the preferred stock is convertible into common stock in April 1998 at $2.25 a share, it may be redeemed by Second National at par any time after April 30, 1995.
Under the restructuring, Second National agreed to amend the exercise price of existing warrants to purchase up to 360,000 shares of common stock. The price was changed to $2.25 a share, from $7.84, and the expiration date of the warrants was extended to April 30, 1998.
Second National said the formal settlement agreement is subject to regulatory approval and ratification by all noteholders.