BB&T Corp. has answered the question whether it still has a stomach for a deal with BankAtlantic Bancorp.
BB&T on Tuesday said it will assume BankAtlantic's obligations to holders of about $285 million of trust preferred securities. A judge had blocked the original deal on the grounds that it was unfair to those bond holders of BankAtlantic, which is based in Fort Lauderdale, Fla.
BB&T also would receive a 95% preferred interest in a newly established entity that will hold a $423 million pool of loans and $17 million of other assets. The pool of loans, which has an unpaid principal balance of approximately $500 million, represents a portion of the loans that BankAtlantic would have retained under the original agreement, BB&T says.
BB&T said it has thoroughly vetted the loans. About 50% of which of them are classified as performing as of Jan. 31. The recoverable principal value is estimated at $350 million, BB&T says.
"I am pleased to move forward with our planned transaction," BB&T Chairman and Chief Executive Kelly King said in a press release. "The improving economy in Southeast Florida makes this acquisition even more compelling. … This amendment to our original agreement fully addresses litigation obstacles."
Under the revised deal, BB&T would still acquire approximately $2.1 billion of loans and approximately $3.3 billion of deposits based on Sept. 30, 2011, balances. BB&T will pay a premium equal to 9% of total deposits at Sept. 30, 2011. It is subject to adjustment at closing but cannot exceed $316 million.
BankAtlantic Bancorp will provide BB&T with an incremental $35 million guarantee to further assure BB&T's recovery of the $285 million assumed liability, BB&T says.
Approximately $255 million of the assumed trust preferred securities are immediately redeemable, and the remaining $30 million are redeemable starting in September or December 2012. BankAtlantic Bancorp will pay all accrued interest on the trust preferred securities in connection with the closing of the transaction.
BB&T's shares were up around 1%, at $29.56 apiece, in early trading on Tuesday.
The deal is expected to close in the second quarter.
Deutsche Bank Securities Inc., Squire Sanders (US) LLP and Wachtell, Lipton, Rosen & Katz advised BB&T in this transaction. Sandler O'Neill and Partners and Cantor Fitzgerald & Co. provided financial advice to BankAtlantic.