Business Context and Reporting Period
This Form 8-K Current Report was filed by Capital One Financial Corporation on June 6, 2006. The filing primarily announces the closing of a public offering of trust preferred securities and provides updates regarding a proposed merger with North Fork Bancorporation, Inc.
Key Financial Metrics
- Capital Raised: $345,000,000 aggregate principal amount of 7.50% Enhanced Trust Preferred Securities (Enhanced TRUPS).
- Instrument Details: The securities represent preferred beneficial interests in Capital One Capital II, a statutory trust. They are guaranteed on a subordinated basis by Capital One Financial Corporation.
- Underlying Debt: Proceeds were invested in 7.50% Junior Subordinated Debt Securities due 2066.
- Underwriters: Citigroup Global Markets Inc. served as the representative for the underwriters.
Material Changes and Transactions
The primary material event is the successful closing of the $345 million Enhanced TRUPS offering on June 6, 2006. In connection with this issuance, the Company entered into a Capital Replacement Covenant. This covenant restricts the Company from redeeming or repurchasing the Debt Securities unless such actions are funded by the proceeds of selling securities with equity-like characteristics that are the same as or more equity-like than the Debt Securities.
Outlook, Risks, and Contingencies
Merger Activity: Capital One is pursuing a merger with North Fork Bancorporation, Inc. A Registration Statement on Form S-4 was filed on May 1, 2006, and amended on June 8, 2006. A definitive joint proxy statement/prospectus is expected to be mailed to stockholders.
Risk Disclosure: The filing notes that the description of the securities and related documents is not complete and is qualified by reference to the full text of the exhibits attached to the report. Investors are urged to read the definitive proxy statement for the merger for important information.
Investor Verification Checklist
- Verify the terms of the Capital Replacement Covenant (Exhibit 99.1) to understand restrictions on future debt redemption.
- Review the definitive joint proxy statement/prospectus for the proposed merger with North Fork Bancorporation, Inc., once available.
- Confirm the final terms of the 7.50% Junior Subordinated Debt Securities due 2066 via the Indenture (Exhibit 4.1).
- Check the tax opinion rendered by Cleary Gottlieb Steen & Hamilton LLP (Exhibit 8.1) for implications on the securities.