Business Context and Reporting Period
This Form 8-K Current Report was filed by Capital One Financial Corporation on August 1, 2006. The filing primarily addresses the closing of a public offering of capital securities and provides updates regarding a proposed merger with North Fork Bancorporation, Inc.
Key Financial Metrics and Transaction Details
- Capital Raised: $650,000,000 aggregate liquidation amount.
- Instrument: 7.686% Capital Securities (preferred beneficial interests in Capital One Capital III).
- Underlying Debt: Proceeds were invested in 7.686% Junior Subordinated Debt Securities due 2066.
- Guarantee: The Capital Securities are guaranteed on a subordinated basis by Capital One Financial Corporation.
- Underwriters: J.P. Morgan Securities Inc., Citigroup Global Markets Inc., and Lehman Brothers Inc.
The filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period, as this is a transaction-specific report rather than a periodic financial statement.
Material Changes and Covenants
In connection with the issuance of the Capital Securities, the Company entered into a Replacement Capital Covenant. Under this agreement, Capital One agreed not to redeem or repurchase the Debt Securities unless such actions are funded by the proceeds from the sale of specified securities with equity-like characteristics that are the same as, or more equity-like than, the Debt Securities at the time of redemption.
Outlook, Risks, and Contingencies
Merger Activity: The Company is pursuing a merger with North Fork Bancorporation, Inc. A joint proxy statement/prospectus was mailed to stockholders on or about July 14, 2006. The filing directs investors to review this document for important information regarding the transaction.
Legal Opinion: Sullivan & Cromwell LLP rendered an opinion regarding certain tax matters in connection with the issuance of the Capital Securities.
Risk Disclosure: The description of the securities and related documents is qualified by reference to the full text of the exhibits attached to the report.
Investor Verification Checklist
- Verify the terms of the 7.686% Capital Securities and the underlying Junior Subordinated Debt Securities in the attached exhibits.
- Review the Replacement Capital Covenant (Exhibit 99.1) to understand restrictions on future debt repurchases.
- Obtain and read the definitive joint proxy statement/prospectus for the proposed merger with North Fork Bancorporation.
- Confirm the tax implications of the transaction as outlined in the opinion of Sullivan & Cromwell LLP (Exhibit 8.1).