BIRMINGHAM, Ala. (AP) - Regions Financial Corp. said Thursday that it achieved nearly 29 percent acceptance of its capital-raising offer to exchange up to 110 million shares of common stock for $700 million in debt securities.
By the exchange offer's deadline on Wednesday night, holders of about $202 million worth of 6.625 percent trust-preferred securities had agreed to the swap, out of a total $700 million eligible for the exchange, the Birmingham-based regional bank said.
When the exchange offer is settled June 22, about 33 million in shares of Regions common stock will be issued to those who accepted the offer. The issuance of additional shares will dilute the value of existing shares.
The exchange offer is one of the steps Regions Financial has taken to satisfy the U.S. Treasury Department's demand that it raise $2.5 billion to bolster its cash position. The demand came after government stress tests determined Regions would require more capital to survive any further weakness in the economy.
On May 20, the Birmingham, Ala.-based bank said it would raise $1.85 billion by selling 400 million common shares and 250,000 convertible preferred shares.
On Tuesday, Fitch Ratings downgraded the long-term issuer default rating of Regions Financial and its Regions Bank subsidiary, saying the bank is unlikely to make a profit this year and reported serious deterioration in the quality of its loans during the first quarter. On Wednesday, Regions was among 18 banks whose ratings were cut by Standard & Poor's amid concern about further weakening in the financial sector.
Shares of Regions Financial rose 9 cents to $4.08 in Thursday morning trading.
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