UPDATE 1-South Financial slashes dividend, issues stock, debt
May 2nd, 2008 | by admin |(Recasts, adds details)
May 2 (Reuters) - South Financial Group Inc (TSFG.O: Quote, Profile, Research)slashed its quarterly dividend and said it plans to issuepreferred stock and debt in an effort to boost its capitallevel.
South Financial shares, which touched a high of $17.13 inearly trade on Friday, shed most of their gains and weretrading up more than 8 percent at $7.03 on Nasdaq.
The bank is the latest to join a pool of small andmedium-sized banks cutting dividends and issuing stock tobetter their capital reserves amid a slump in the financialmarkets.
Last month, First Horizon National Corp (FHN.N: Quote, Profile, Research) suspendedpayment of its cash dividend, while Colonial BancGroup Inc(CNB.N: Quote, Profile, Research) slashed its dividend by half. Both banks had also setplans to raise capital by offering additional stock.
South Financial plans to issue about $250 million ofconvertible preferred stock, bank-level subordinated debt of upto about $100 million and reduce quarterly cash dividend to 1cent per share from 19 cents a share.
The slash in dividend will enable the Greenville, SouthCarolina-based company to preserve about $52 million annually.
South Financial said it has accepted commitments topurchase 250,000 shares of preferred stock with a purchaseprice and liquidation value of $1,000 per share. (Reporting by Sweta Singh; Editing by Himani Sarkar)
