| | Item 3.03 | Material Modification to Rights of Security Holders. |
On June 1, 2021, Ally Financial Inc. (“Ally”) filed a Certificate of Designation (the “Certificate”) with the Secretary of State of the State of Delaware, establishing the rights, preferences, privileges, qualifications, restrictions and limitations of Ally’s 4.700% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C (the “Series C Preferred Stock”). The Certificate was filed in connection with the Underwriting Agreement (as defined in Item 8.01 below).
The Series C Preferred Stock ranks, with respect to the payment of dividends and distributions upon Ally’s liquidation, dissolution or winding-up, respectively: (i) senior to Ally’s common stock and to any class or series of its capital stock it may issue in the future that is not expressly stated to be on parity with or senior to the Series C Preferred Stock with respect to such dividends and distributions; (ii) on parity with any class or series of Ally’s capital stock it has issued and may issue in the future that is expressly stated to be on parity with the Series C Preferred Stock with respect to such dividends and distributions, including Ally’s 4.700% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”); and (iii) junior to any class or series of Ally’s capital stock it may issue in the future that is expressly stated to be senior to the Series C Preferred Stock with respect to such dividends and distributions, if the issuance is approved by the holders of at least two-thirds of the outstanding shares of Series C Preferred Stock.
Under the terms of the Series C Preferred Stock, the ability of Ally to pay dividends on, make distributions with respect to, or to redeem, purchase or acquire Ally’s common stock or any other stock ranking junior to or on a parity with the Series C Preferred Stock, including the Series B Preferred Stock, is subject to restrictions in the event that Ally has not declared and either paid or set aside a sum sufficient for payment of full dividends on the Series C Preferred Stock for the most recently completed dividend period.
The terms of the Series C Preferred Stock are more fully described in the Certificate, 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 |
On June 1, 2021, Ally filed the Certificate with the Secretary of State of the State of Delaware, amending Ally’s Amended and Restated Certificate of Incorporation by establishing Ally’s Series C Preferred Stock, consisting initially of 1,000,000 authorized shares, $0.01 par value and $1,000 liquidation value per share.
Ally will pay dividends on the Series C Preferred Stock only when, as, and if declared by its board of directors (the “Board”) or a duly authorized committee of Ally’s board and to the extent that Ally has lawfully available funds to pay dividends. Dividends on the Series C Preferred Stock will accrue at a rate per annum equal to (i) 4.700% from the settlement date to, but excluding, May 15, 2028 (the “first reset date”); and (ii) for each reset period from, and including, May 15, 2028, the seven-year treasury rate, as defined in the Certificate, as of the most recent reset dividend determination date plus 3.481%. A “reset date” means the first reset date and each date falling on the seventh anniversary of the preceding reset date. Reset dates, including the first reset date, will not be adjusted for business days. A “reset period” means the period from and including the first reset date to, but excluding, the next following reset date and thereafter each period from and including each reset date to, but excluding, the next following reset date. A “reset dividend determination date” means, in respect of any reset period, the day falling three business days prior to the beginning of such reset period
The Series C Preferred Stock has a liquidation preference of $1,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends. Liquidating distributions will be made on the Series C Preferred Stock only to the extent Ally’s assets are available after satisfaction of all liabilities and obligations to creditors and subject to the rights of holders of any shares of capital stock ranking senior to the Series C Preferred Stock as to liquidation rights and pro rata as to any other shares of Ally’s capital stock ranking on a parity with the Series C Preferred Stock as to such distributions, including the Series B Preferred Stock. After payment of the full amount of the liquidating distribution, holders of the Series C Preferred Stock are not entitled to any further participation in any distribution of Ally’s assets.
The Series C Preferred Stock does not have a stated maturity date, will not be subject to any sinking fund or any other obligation of Ally for their repurchase, redemption or retirement and will be perpetual unless redeemed at Ally’s option. Ally may redeem the Series C Preferred Stock at its option at a redemption price equal to $1,000 per
