CENTRAL PACIFIC FINANCIAL PLANS TO RAISE $325 MILLION IN NEW CAPITAL
THE CARLYLE GROUP AND ANCHORAGE CAPITAL GROUP EACH TO INVEST
APPROXIMATELY $98 MILLION
RECAPITALIZATION PLAN WILL STRENGTHEN BALANCE SHEET AND FOSTER LONGER TERM GROWTH
Honolulu, HI – November 4, 2010 – Central Pacific Financial Corp., (NYSE: CPF) (“the Company”) parent company of Central Pacific Bank (CPB) (“Bank”) announced today that it has entered into definitive agreements with The Carlyle Group and Anchorage Capital Group, L.L.C. (collectively, the “Lead Investors”) pursuant to which each Lead Investor agreed to invest approximately $98 million in common stock of the Company. This investment is part of an expected aggregate $325 million capital raise by the Company from institutional and other investors ("Investors"). The investment and related transactions, which were unanimously approved by the Company's Board of Directors, are subject to the remaining $130 mi llion of capital being raised, regulatory approvals and other conditions. The Company also plans to conduct a $20 million rights offering after the closing of the capital raise that will allow current shareholders or their transferees to purchase shares of common stock at the same purchase price per share as the Investors.
"The recapitalization will significantly improve CPF’s balance sheet and provide the Company with the capital necessary to address its near-term challenges and build for the longer-term. With this capital support, we will be able to continue to meet our longstanding commitment to the community, which we have served over the last 56 years. We have appreciated the loyalty of our employees and customers, and look forward to their continued support,” said John C. Dean, Executive Chairman of the Board. “We are also pleased we are able to offer our current shareholders the opportunity to participate through the planned rights offering on the same price per share as the new investors."
"CPF has made significant strides in improving its asset quality and we are delighted to partner with the Company’s strong management team as it continues to execute its recovery plan," said P. Olivier Sarkozy, Carlyle Managing Director. “We believe CPF has a valuable core franchise and with this capital it is well positioned for future growth and success.”
Daniel Allen, Anchorage Capital Group, L.L.C. Partner said, "We are pleased to join in CPF’s recapitalization. CPF’s management team has made significant progress in its recovery plan and while there is work to be done, we believe the Company is headed in the right direction.”
Each of The Carlyle Group and funds managed by Anchorage Capital Group, L.L.C. will own 24.9% of the common stock of the Company prior to giving effect to the rights offering. The shares of common stock will be purchased at $0.75 per share for an aggregate price of $195 million. Each Lead Investor shall be entitled to one Board seat on each of the Company and Bank boards of directors.
Closing of each of the Lead Investor’s investment is conditioned on, among other things, receipt of requisite regulatory approvals and the Company’s receipt of approval from the NYSE to issue the common stock in the capital raise in reliance on the shareholder approval exception set forth in Section 312.05 of the NYSE listed company manual (or, in the event that the NYSE does not provide such approval, receipt of shareholder approval of the issuance of common stock in the capital raise). In addition, the closing of each Lead Investor’s investment is conditioned upon the Company raising the remaining $130 million from other investors and exchanging its TARP preferred stock for common stock and amending its TARP warrant on specified terms. Prior to closing, the Company also intends to undertak e a one-for-twenty reverse stock split, which was previously approved by shareholders at the company’s annual meeting held on May 24, 2010.
Closing of the capital raise is expected in the first quarter of 2011. CPF’s current management team is expected to remain in place.
Sullivan and Cromwell LLP served as legal advisor to Central Pacific Financial Corp. Wachtell, Lipton, Rosen & Katz served as legal advisor to The Carlyle Group. Milbank, Tweed, Hadley & McCloy LLP served as legal advisor to Anchorage Capital Group, L.L.C.
About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with $4.2 billion in assets. Central Pacific Bank, its primary subsidiary, operates 35 branches, over 120 ATMs, and a residential mortgage subsidiary in the state of Hawaii. For additional information, please visit the Company’s website at http://www.centralpacificbank.com.
