VILLAGE BANK AND TRUST FINANCIAL CORP. (NASDAQ:VBFC) Files An 8-K Entry into a Material Definitive AgreementItem 1.01
On March 21, 2018, Village Bank and Trust Financial Corp. (the “Company”) entered into a Subordinated Note Purchase Agreement (the “Purchase Agreement”) with 10 accredited investors under which the Company issued an aggregate of $5.7million of fixed-to-floating rate subordinated notes due March 31, 2028 (the “Notes”) in a private placement. The Company expects to receive approximately $5.525 million in net proceeds after deducting issuance costs.
The Notes accrue interest at a fixed interest rate of 6.50% per year for the first five years of their term. For the remaining five years of their term, the Notes bear interest at a floating rate of three-month LIBOR plus 3.73%. The Notes are not convertible into common stock or preferred stock, and are not callable by the holders. The Company has the right to redeem the Notes, in whole or in part, without premium or penalty, at any time on or after March 21, 2023, with certain exceptions provided in the Notes that allow the Company to redeem the Notes prior to that date.
If an event of default occurs, such as the bankruptcy of the Company, the holder of a Note may declare the principal amount of the Note to be due and immediately payable. The Notes are unsecured obligations subordinate and junior in right of payment to all of the Company’s existing and future senior indebtedness, whether secured or unsecured, including claims of depositors and general creditors, and rank equally in right of payment with any unsecured, subordinated indebtedness that the Company may incur in the future that rank equally with the Notes.
The Notes are intended to qualify as Tier 2 capital for regulatory purposes. The Company expects to use the net proceeds from the sale of the Notes to redeem all of the Company’s 5,027 outstanding shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A on March 30, 2018, and for general corporate purposes.
The Notes were offered and sold in reliance on the exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder. Accordingly, the Notes were offered and sold exclusively to persons who are “accredited investors” within the meaning of Rule 501(a) of RegulationD.
The foregoing descriptions of the Purchase Agreement and the Notes do not purport to be complete and are qualified in their entirety by reference to the forms of the Purchase Agreement and the Notes which are attached hereto as Exhibits 10.1 and 4.1, respectively, and are incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth under Item 1.01 above is incorporated by reference into this Item 2.03.
On March 21, 2018, the Company issued a press release regarding the offering of Notes. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d)Exhibits.
Village Bank & Trust Financial Corp. ExhibitEX-4.1 2 tv489182_ex4-1.htm EXHIBIT 4.1 Exhibit 4.1 FORM OF SUBORDINATED NOTE 6.50% Fixed to Floating Rate Subordinated Note due March 31,…To view the full exhibit click here
About VILLAGE BANK AND TRUST FINANCIAL CORP. (NASDAQ:VBFC)
Village Bank and Trust Financial Corp. is a bank holding company. The Company has three active subsidiaries: Village Bank (the Bank), Southern Community Financial Capital Trust I and Village Financial Statutory Trust II. The Bank has one active subsidiary: Village Bank Mortgage Corporation (the mortgage company), which is a full service mortgage banking company. The Company is the holding company of and successor to the Bank. The Bank is the primary operating business of the Company. The Bank offers a range of banking and related financial services, including checking, savings, certificates of deposit and other depository services, and commercial, real estate and consumer loans, primarily in the Richmond, Virginia metropolitan area. The Bank offers a range of financial services and products, and specializes in providing customized financial services to small and medium sized businesses, professionals, and individuals. The Bank conducts business from over 10 branch banking offices.
