Heritage Commerce Corp Completes $75 Million Private Placement

Heritage Commerce Corp Completes $75 Million Private Placement

  • Posted: 07/21/2010
  • Castle Creek

SAN JOSE, Calif.–(GLOBE NEWSWIRE)–Heritage Commerce Corp (Nasdaq:HTBK) (the “Company”), the holding company of Heritage Bank of Commerce (the “Bank”), today announced the closing of a private placement totaling $75 million of convertible preferred stock. The proceeds from the capital raise will be used for general corporate purposes, including supporting the capital needs of the Bank.

The Company issued 53,996 shares of Series B Mandatorily Convertible Cumulative Perpetual Preferred Stock (“Series B Preferred Stock”) at a price of $1,000 per share and 21,004 shares of Series C Convertible Perpetual Preferred Stock (“Series C Preferred Stock”) at a price of $1,000 per share.  The Series B Preferred Stock will be convertible into 14.4 million shares of the Company’s common stock and the Series C Preferred Stock will be convertible into 5.6 million shares of the Company’s common stock both at a conversion price of $3.75 per share.  The Series B Preferred Stock will automatically convert into shares of the Company’s common stock after the Company receives shareholder approval for the transaction, which is required under applicable NASDAQ listing rules.  The Company plans to hold a special meeting of shareholders for this purpose as soon as practicable but not later than November 30, 2010. The Series C Preferred Stock is a class of preferred stock that following shareholder approval of the transaction will be substantially similar to the common stock, except for a liquidation preference over the Company’s common stock. The Series C Preferred Stock will convert into common stock following receipt of necessary shareholder approval described above, and then only when transferred to unaffiliated third parties by its initial owners in a widely dispersed offering.  The Series B Preferred Stock and the Series C Preferred Stock are both nonvoting except for extraordinary transactions that effect the rights of the preferred stock.

“The success of this capital raise is a reflection of the strength of our franchise, employees and business plan as a leading community business bank in the Bay Area,” said Walter Kaczmarek, Chief Executive Officer and President. “For the past eighteen months we have been carefully focused on improving our capital position while reducing risk and have accomplished this through the $75 million private placement. In addition to providing added insulation to weather future impacts from the continued weak economic environment, the additional capital will significantly enhance our strategic capabilities to grow our franchise and support the needs of our customers.”

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