SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ]Confidential, For Use of the
Commission
Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[x] Soliciting Material Under Rule 14a-12
MOUNTAINBANK FINANCIAL CORPORATION
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
(5) Total fee paid:
- ------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
- ------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- ------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- ------------------------------------------------------------------------------
(3) Filing Party:
- ------------------------------------------------------------------------------
(4) Date Filed:
- ------------------------------------------------------------------------------
THE SOUTH
Financial Group
102 South Main Street
Greenville, SC 29601
864.255.4919
NEWS RELEASE------------------------------------------------------------------
Date: May 14, 2003
Release Date: Immediate
THE SOUTH FINANCIAL GROUP TO ACQUIRE MOUNTAINBANK;
EXPANDS INTO WESTERN NORTH CAROLINA MARKETS
GREENVILLE, SC - The South Financial Group, Inc. (Nasdaq: TSFG) today announced
a definitive agreement to acquire MountainBank Financial Corporation (Nasdaq:
MBFC) in an all stock transaction valued at approximately $137 million.
MountainBank, the largest community bank headquartered in Western North
Carolina, operates 18 branch offices in 10 counties with approximately $850
million in assets.
MountainBank has the #2 deposit market share in Henderson County, with 24% of
the market, and an expanding presence in attractive Western North Carolina
markets, including Asheville. Immediately following the merger, MountainBank's
banking subsidiary will retain the MountainBank name.
"The merger with MountainBank fits solidly with our disciplined acquisition
criteria," said Mack I. Whittle, Jr., President and Chief Executive Officer of
The South Financial Group. "As previously stated, we will only do mergers that
enhance our geographic franchise and are accretive to our financial goals.
MountainBank exceeds these standards. We expect the merger to be accretive to
both GAAP and cash earnings per share in the first full year and to enhance our
financial and strategic goals. We have similar banking cultures, ones that
emphasize superior customer service and knowing our customers well."
Whittle continued, "The Hendersonville and Asheville markets are strong, growing
markets, which we have targeted for expansion for many years. It's a logical
extension of our franchise into neighboring communities. Many of our existing
customers have vacation homes in these attractive mountain communities. Plus, we
bring a track record of successful operations in resort communities from our
experience in the coastal Carolinas and Florida. The MountainBank merger fits
extremely well with what we already do and where we already are, while advancing
our focus on profitability."
J. W. Davis, President and Chief Executive Officer of MountainBank, who will
join the TSFG Board of Directors, said, "We are excited to be joining The South
Financial Group. Our companies bring a shared commitment to our customers and
our communities. MountainBank expresses this philosophy with its tag line,
`Taking care of
our own.' The South Financial Group shares this operating philosophy, which will
make for an outstanding partnership. In keeping with our original commitment to
shareholders, we are extremely pleased that over the past five and one half
years we have produced superior returns to our charter shareholders. This
strategic alignment greatly enhances our shareholders' liquidity and provides
them with continued long-term investment value."
MountainBank shareholders will receive $32.50 per MountainBank common share,
payable in TSFG common stock. The TSFG common stock will be valued based upon
the 10-day trading average immediately subsequent to Federal Reserve consent,
subject to pricing collars. In the merger, TSFG expects to issue approximately
5.5 million shares of common stock for all the common stock, preferred stock and
stock obligations of MountainBank, based on current market prices. The
transaction, which is expected to close in October 2003, is subject to
regulatory and MountainBank shareholder approvals.
Assuming expense savings of 20%, TSFG anticipates that the merger will be
accretive in the first year. This estimate does not include any anticipated
revenue enhancements. TSFG expects to incur pre-tax merger charges of
approximately $13 million. The transaction is valued at approximately 2.4x
MountainBank's book value at March 31, 2003 and 20.4x earnings for the
last-twelve-months through March 31, 2003.
The South Financial Group, headquartered in Greenville, South Carolina, is a
financial services company with approximately $9.0 billion in total assets and
115 branch offices in South Carolina, Florida, and North Carolina. It operates
two subsidiary banks: Carolina First Bank and Mercantile Bank. Carolina First
Bank, the largest South Carolina-based commercial bank, operates in South
Carolina, North Carolina, and on the internet under the brand name, Bank
CaroLine. Mercantile Bank operates in Florida, principally in the Jacksonville,
Orlando, and Tampa Bay markets. The South Financial Group's common stock trades
on the Nasdaq National Market under the symbol TSFG. Press releases along with
additional information may also be found at The South Financial Group's web
site: WWW.THESOUTHGROUP.COM.
TRANSACTION SUMMARY
- -------------------
Price per common share $32.50 per share of MBFC
Aggregate transaction value Approximately $137 million
Form of consideration 100% common stock
Implied exchange ratio 1.310 based on 10 trading day average ending
5/13/03, though subject to change
Pricing mechanism TSFG stock will be valued based on the 10
trading day average immediately subsequent to
Federal Reserve approval, though not less than
$21.00 nor greater than $25.00 per share. (At
$25.00 or above, MBFC shareholders receive a
fixed exchange ratio of
2
1.300; at $21.00 or below MBFC shareholders
receive a fixed exchange ratio of 1.548)
Walkaway provision Either party can terminate the merger if the
10 trading day average is above $29.00 or
below $17.00 (although the non-terminating
party can reinstate the merger by allowing the
TSFG stock to be valued at its actual 10 day
average)
Expected closing October 2003
Anticipated merger cost savings Approximately $5.1 million pre-tax in 2004,
or 20%
Anticipated merger-related Approximately $13 million pre-tax
charges
MBFC preferred stock To be converted into TSFG common stock based
on the number of shares of MBFC common stock
into which it converts
MBFC options To be converted into the right to purchase
TSFG common stock based on the exchange ratio
Due diligence Completed
Required approvals Regulatory, MountainBank shareholders
PRICING OVERVIEW
- ----------------
Price to LTM EPS ($1.59) 20.4x
Price to 3/31/03 book value ($13.62) 2.4x
Price to 3/31/03 tangible book value ($12.33) 2.6x
MOUNTAINBANK PROFILE
- --------------------
- $850 million full-service community bank headquartered in
Hendersonville, NC
- 18 branches in 10 counties
- Ranks #2 in deposit market share in Henderson County (24% of
market)
- ROA: annualized 0.80% for 1Q03 and 0.90% for 2002
- ROE: annualized 12.42% for 1Q03 and 13.07% for 2002
CONFERENCE CALL / WEBCAST INFORMATION
- -------------------------------------
The South Financial Group will host a conference call on Thursday, May 15,
2003 at 10:00 a.m. (ET) to discuss the acquisition of MountainBank and answer
analyst questions. It will also provide a live webcast of the call, which may be
accessed through The South Financial Group's Internet site at
www.thesouthgroup.com under the Investor Relations tab. Additional material
information, including forward-looking statements such as future projections,
may be discussed during the presentation. To participate in the conference call,
please call 1-888-405-5393 or 1-484-630-4135 using the access code "The South."
A 7-day rebroadcast of the call will be available via 1-800-289-1164
3
or 1-402-998-1038. The South Financial Group will also provide a copy of the
presentation in the Investor Relations section of its website.
This press release contains financial information determined by methods
other than in accordance with Generally Accepted Accounting Principles ("GAAP").
The South Financial Group's management uses these non-GAAP measures in their
analysis of TSFG's performance. In particular, a number of measures presented
adjust GAAP information to exclude the effects of non-operating item (such as
merger-related costs, gains or losses on asset sales, and non-operating
expenses) and the amortization of intangibles for "cash basis" performance
measures. Since these items and their impact on TSFG's performance are difficult
to predict, management believes presentations of financial measures excluding
the impact of these items provide useful supplemental information that is
essential to a clear understanding of the operating results of TSFG. These
disclosures should not be viewed as a substitute for GAAP operating results, and
furthermore TSFG's non-GAAP measures may not necessarily be comparable to
non-GAAP performance measures of other companies.
Certain matters set forth in this news release may contain forward-looking
statements that are provided to assist in the understanding of anticipated
future financial performance. These statements, as well as other statements that
may be made by management in the conference call, include, but are not limited
to, factors which may affect earnings, expected financial results for the
MountainBank merger, estimates of merger-related cost savings and charges, and
credit quality assessment. However, such performance involves risks and
uncertainties, such as market deterioration, that may cause actual results to
differ materially from those in such statements. For a discussion of certain
factors that may cause such forward-looking statements to differ materially from
TSFG's actual results, see TSFG's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2003. TSFG undertakes no obligation to release revisions to
these forward-looking statements or reflect events or circumstances after the
date of this release.
The foregoing may be deemed to be offering materials of TSFG in connection
with TSFG's proposed acquisition of MountainBank, on the terms and subject to
the conditions in the Agreement and Plan of Merger, dated May 14, 2003, between
TSFG and MountainBank. This disclosure is being made in connection with
Regulation of Takeovers and Security Holder Communications (Release Nos. 33-7760
and 34-42055) adopted by the Securities and Exchange Commission ("SEC").
Shareholders of MountainBank and other investors are urged to read the proxy
statement/prospectus that will be included in the registration statement on Form
S-4, which TSFG will file with the SEC in connection with the proposed merger
because it will contain important information about TSFG, MountainBank, the
merger, the persons soliciting proxies in the merger and their interests in the
merger and related matters. After it is filed with the SEC, the proxy
statement/prospectus will be available for free, both on the SEC web site
(http://www.sec.gov) and from TSFG and MountainBank as follows:
Mary M. Gentry, Investor Relations, The South Financial Group,
Inc., 102 South Main Street, Greenville, SC 29601, Phone: (864) 255-4919,
MARY.GENTRY@THESOUTHGROUP.COM.
J.W. Davis, President and CEO, MountainBank Financial Corporation,
201 Wren Drive, Hendersonville, NC 28792, Phone: (828) 693-7376.
In addition to the proposed registration statement and proxy
statement/prospectus, TSFG files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information filed by TSFG at the SEC's public
reference rooms at 450 Fifth Street, N.W., Washington, D.C., 20549 or at the
SEC's other public reference rooms in New York and Chicago. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. TSFG's
filings with the SEC are also available to the public from commercial
document-retrieval services and on the SEC's web site at http://www.sec.gov.
CONTACTS:
William S. Hummers III, Executive Vice President, (864) 255-7913
Mary M. Gentry, Treasurer, (864) 255-4919
***END***
4