Introductory Note
On December 11, 2020, The Charles Schwab Corporation (“CSC”) issued and sold 2,500,000 depositary shares (“Depositary Shares”), each representing a 1/100th ownership interest in a share of 4.000% fixed-rate reset non-cumulative perpetual preferred stock, Series H, $0.01 par value per share, with a liquidation preference of $100,000 per share (equivalent to $1,000 per Depositary Share) (the “Series H Preferred Stock”). The net proceeds of the offering of the 2,500,000 Depositary Shares were approximately $2,470,000,000, after deducting underwriting discounts and commissions and estimated offering expenses. This issuance is referred to as the “Preferred Issuance.”
Also on December 11, 2020, CSC issued $1,250,000,000 aggregate principal amount of 0.900% Senior Notes due 2026 and $750,000,000 aggregate principal amount of 1.650% Senior Notes due 2031 (collectively, the “Notes”). The net proceeds of the offering of the Notes were approximately $1,981,000,000, after deducting underwriting discounts and commissions and estimated offering expenses. This issuance is referred to as the “Debt Issuance.”
| Item 3.03 | Material Modification to Rights of Security Holders |
In connection with the Preferred Issuance, CSC filed a Certificate of Designations (the “Certificate of Designations”) with the Secretary of State of the State of Delaware, establishing the voting rights, powers, preferences and privileges, and the relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of the Series H Preferred Stock on December 10, 2020. Holders of the Depositary Shares will be entitled to all proportional rights and preferences of the Series H Preferred Stock (including dividend, voting, redemption and liquidation rights).
Under the terms of the Series H Preferred Stock, the ability of CSC to pay dividends on, make distributions with respect to, or to repurchase, redeem or acquire its common stock, nonvoting common stock or any preferred stock ranking on parity with or junior to the Series H Preferred Stock, is subject to restrictions in the event that CSC does not declare and either pay or set aside a sum sufficient for payment of dividends on the Series H Preferred Stock for the immediately preceding dividend period.
The terms of the Series H Preferred Stock are more fully described in the Certificate of Designations which is included as Exhibit 3.1 to this Current Report on Form 8–K and is incorporated by reference herein.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year |
The Certificate of Designations became effective upon filing with the Secretary of State of the State of Delaware. The terms of the Series H Preferred Stock are more fully described in the Certificate of Designations which is included as Exhibit 3.1 to this Current Report on Form 8–K and is incorporated by reference herein.
Preferred Issuance:
On December 8, 2020, in connection with the Preferred Issuance, CSC entered into an Underwriting Agreement (the “Preferred Underwriting Agreement”) with BofA Securities, Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as the representatives of the several underwriters named therein (collectively, the “Preferred Underwriters”), under which CSC agreed to sell to the Preferred Underwriters 2,500,000 shares of Depositary Shares, each representing a 1/100th ownership interest in a share of Series H Preferred Stock.
