By Marla Viray
Heritage Oaks Bancorp on Aug. 4 completed the purchase, after being the successful bidder in a public auction, of trust preferred securities issued by Heritage Oaks Capital Trust II, with an original face value of $3.0 million.
The purchase was at 85% of par, or $2.55 million plus accrued and unpaid interest, according to a Form 8-K filed Aug. 4.
In connection with the transaction, Heritage Oaks Bancorp will retire $3.0 million of floating-rate junior subordinated debt due August 2037, variable 3-month LIBOR+1.72%. The Paso Robles, Calif.-based company expects to recognize a gain of approximately $450,000 before taxes in connection with the retirement. Upon retirement of the debt, the trust will have approximately $5.25 million remaining outstanding.
The company used internal resources to fund the purchase. Proceeds from the partial redemption of the debentures will be applied to redeem a proportionate amount of the TruPS and the trust’s common securities.
Heritage Oaks Capital Trust II is a statutory business trust, and is a wholly owned, non-financial, non-consolidated subsidiary of the company.