Republic Bank and Norcross Braca Group have announced the signing of a letter of intent (LOI) today, Thursday. The LOI outlines Norcross Braca Group's plan to invest at least $35 million as part of a larger $75 million capital raise for Republic Bank. The remaining $40 million will be raised from third-party investors, referred to as "Additional Investors".
The capital infusion is expected to bolster Republic Bank's financial position and enhance its operations, ultimately aiming to increase shareholder value. The bank's board will be reconstituted following the capital raise, with nine members including two directors from Norcross Braca Group, two candidates put forth by the Additional Investors, two new independent directors, the bank's CEO, and two legacy independent directors.
In addition to the investment, Norcross Braca Group will also have the right to appoint two non-voting observers to the board upon execution of a definitive agreement for the capital raise. This agreement will also lead to the dismissal of all litigation against Republic by Norcross Braca Group and cessation of its proxy solicitation efforts.
Upon completion of the capital raise, Republic will cover certain fees and expenses of Norcross Braca Group and take on certain investment banking and legal expenses.
Thomas X. Geisel, President and Chief Executive Officer of Republic, expressed his optimism about the deal. "In addition to strengthening our balance sheet, we anticipate that this additional capital will provide greater flexibility to invest in the business and deliver extraordinary service to our loyal customer base and depositors," he said. He also thanked Norcross Braca Group for their constructive engagement in reaching this point.
George E. Norcross, III shared similar sentiments: “As significant Republic shareholders, we believe in the Company's potential and are excited about being part of its next chapter."
According to InvestingPro data, Republic Bank currently has a market cap of $15.78B, a P/E ratio of 18.63, and a dividend yield of 1.25%. It's worth noting that the bank has raised its dividend for 11 consecutive years, which is a testament to its commitment to returning value to shareholders, as highlighted in InvestingPro Tips. However, the bank's stock has been noted to trade with high price volatility, and analysts predict a sales decline in the current year.
The proposed transaction is subject to the negotiation of definitive agreements, shareholder and regulatory approvals. Legal advisors Squire Patton Boggs (US) LLP and Vinson & Elkins, L.L.P. are serving Republic Bank, while Sullivan & Cromwell LLP and Ballard Spahr are representing Norcross Braca Group.
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