| | Fixed Rate Trust Preferred Secured Offering. On October 31, 2008, United Community Banks, Inc. (“UCBI”) completed a private placement of $12,131,000 of trust preferred securities through a newly formed Delaware trust subsidiary, United Community Statutory Trust II (“Statutory Trust II”), pursuant to an Amended and Restated Trust Agreement, dated October 31, 2008. The trust preferred securities mature October 31, 2038, are redeemable at UCBI’s option at par of $1,000 per capital security on or after October 31, 2013 and bear interest at a fixed rate equal to 9.0% of the liquidation amount of the securities. Capital securities of Statutory Trust II were issued to accredited investors. All of the common securities of Statutory Trust II are held by UCBI. The proceeds from the sale of the trust preferred securities were used by Statutory Trust II to purchase $12,131,000 in aggregate principal amount of UCBI’s fixed rate junior subordinate debentures. The net proceeds to UCBI from the sale of the debentures to the trust will be used for general corporate purposes, which may include providing additional capital to UCBI’s subsidiary bank, United Community Bank. The debentures were issued pursuant to an Indenture, dated October 31, 2008, between UCBI, as issuer, and US National Bank Association, as trustee. Like the trust preferred securities, the debentures bear interest at a fixed rate per annum of 9%. The interest payments on the debentures will be used to pay the quarterly distributions payable by Statutory Trust II to the holders of the trust preferred securities. However, so long as no event of default has occurred under the debentures, UCBI may defer interest payments on the debentures (in which case Statutory Trust II will also defer distributions otherwise on the trust preferred securities) for up to 20 consecutive quarters. The debentures are subordinated to the prior payment of any other indebtedness that, by its terms, is not similarly subordinated. The debentures will be recorded as a long-term liability on UCBI’s balance sheet and will be treated as Tier 1 capital for regulatory purposes. The debentures mature on October 31, 2038 but may be redeemed at UCBI’s option on or after October 31, 2013 or at any time upon certain events, such as change in the regulatory capital treatment of the trust preferred securities, Statutory Trust II being deemed an investment company or the occurrence of certain adverse tax events. Variable Rate Trust Preferred Secured Offering. On October 31, 2008, UCBI completed a private placement of $1,238,000 of trust preferred securities through a newly formed Delaware trust subsidiary, United Community Statutory Trust III (“Statutory Trust III”), pursuant to an Amended and Restated Trust Agreement, dated October 31, 2008. The trust preferred securities mature October 31, 2038, are redeemable at UCBI’s option at par of $1,000 per capital security on or after October 31, 2013 and bear interest at a variable rate equal to prime plus 3% of the liquidation amount of the securities. The “prime rate” means the prime rate published in the Wall Street Journal Southeastern Edition. Capital securities of Statutory Trust III were issued to accredited investors. All of the common securities of Statutory Trust III are held by UCBI. |
