Westrock Sets Sights on More Banking Deals

by George Waldon  on Monday, Feb. 28, 2011 12:00 am  

The Bear State investors bring strong connections to the Little Rock market that point to First Federal expanding to central Arkansas.

"We want to stabilize the business and work through problem assets," Cavin said. "That's priority No. 1. Then we'll look at other opportunities down the road."

The Brandt family, which currently holds an 11.8 percent stake in First Federal and has ties to the company's founding in 1934, still will be involved with the thrift.

"We're really excited about the opportunity with Bear State," Larry Brandt said. "We'll be getting back to being more active making loans and increasing our deposit base."


Millions in New Capital

Improving its capital base was among the regulatory mandates for First Federal. The Bear State investment will provide $40.3 million of new capital in exchange for stock priced at 60 cents per share.

An additional $8.7 million in capital will be raised through a new stock offering, also valued at 60 cents per share. Existing First Federal stockholders will be given first crack. Any new shares not acquired by the existing shareholders will be acquired by Bear State.

One component of the proposed transaction will allow the thrift to shed $16.5 million of TARP-share obligations. Bear State is offering to buy those preferred shares from Uncle Sam for $6 million, a 64 percent discount.

The TARP shares would be converted to warrants for 10 million common shares valued at 60 cents per share for Bear State investors.

The Bear State group will own between 82 and 95 percent of First Federal, depending on how many new shares are purchased by current shareholders.

A reverse stock split will move First Federal shares from penny stock status to $3 per share. During the past 52 weeks, shares traded as high as $3.91 on April 15 to as low as 94 cents on November 24.



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