Republic First Announces $125m Equity Capital Raise to Drive Profitability

Republic Bank announced it has entered into a definitive agreement with certain accredited investors for a private placement of equity securities of the Company in the aggregate amount of $125 million at a purchase price of $2.25 per share of Common Stock equivalent securities.

The Capital Raise, which follows a strategic review process overseen by the Strategic Review Committee of Republic First’s Board of Directors (the “Board”), with the assistance of independent advisors, is intended to support the Company’s execution of a strategic plan to drive profitability and enhance shareholder value.

Affiliates of Castle Creek Capital (together with its affiliates and co-investors, “Castle Creek”), an alternative asset management firm that has more than three decades of experience constructively partnering with community banks, has committed to participate in the Capital Raise for an aggregate amount of $60.725 million. The firm has made more than 300 community bank investments, totaling $1.7 billion across eight private equity funds. As part of the Capital Raise, Castle Creek will have the right following the closing to appoint a director or an observer to the Board and any subsidiary bank Board of Directors. Additionally, an affiliate of Cohen Private Ventures, LLC (“Cohen Private Ventures”) has committed to participate in the Capital Raise on the same terms for an aggregate amount of $30 million.

Thomas Geisel, President and Chief Executive Officer of Republic First, commented:

“This Capital Raise, which is a testament to the strength and potential of Republic First’s brand and business, positions us to accelerate execution of a strategic plan that targets profitability and enhanced value for stakeholders. We appreciate the confidence that Castle Creek has shown in our reconstituted leadership team and new vision. Partnering with an experienced bank investor allows us to not only improve our balance sheet, but also draw on Castle Creek’s extensive community banking acumen and success. We are also fortunate that Cohen Private Ventures, which is a meaningful current investor, believes in our vison and opportunity by committing to significantly add to its investment.

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Although we have significant work in front of us, completing our strategic review and strengthening Republic First’s financial position are important milestones on the path to long-term value creation.”

The consummation of the Capital Raise is conditioned on other accredited investors committing to purchase an additional $34.275 million on the same terms. Additional investors will come from a pool identified by the Company and its advisors. The Capital Raise was negotiated and recommended by the Strategic Review Committee of the Board following its review and evaluation of multiple inquiries from third parties regarding potential transactions and alternative strategies. The participation of Cohen Private Ventures was negotiated at arm’s length.

Tony Scavuzzo, Managing Principal of Castle Creek, added:

“We look forward to supporting Tom, the team, and the Board of Directors. Our unique operating experience plus decades of investing in community banks prepares us well to help drive value creation going forward.”

Structure

The Capital Raise includes (i) Common Stock of the Company, par value $0.01 per share (“Common Stock”), (ii) Series B Convertible Preferred Stock, par value $0.01 (“Series B Preferred Stock”), authorized by the Board through the Company’s existing blank check preferred provision, which will have no voting rights and be economically equivalent to 10 shares of Common Stock and which, upon the authorization of the Non-Voting Common Stock, will automatically convert into 10 shares of Non-Voting Common Stock for each share of Series B Preferred Stock, (iii) Non-Voting common stock of the Company, par value $0.01 (“Non-Voting Common Stock”), to be authorized and issued post-closing upon receipt of shareholder approval and which may be converted into Common Stock at the option of the holder if, following such conversion, the holder will own no more than 9.9% of the outstanding shares of Common Stock, or in connection with specified permitted transfers, and (iv) Warrants issued to Castle Creek to purchase Series B Preferred Stock/Non-Voting Common Stock as further described below (“Warrants” and together with the Common Stock, Series B Preferred Stock and Non-Voting Common Stock, the “Securities”).

At closing, in exchange for the cash consideration of $2.25 per share of Common Stock equivalent securities on an as-converted basis, the Company will issue to each purchaser a mix of voting Common Stock and Series B Preferred Stock agreed by the Company and the purchaser. In consideration of Castle Creek’s role as the anchor investor, the Company will also issue to Castle Creek a Warrant for 1,300,000 shares of Non-Voting Common Stock (or equivalent Series B Preferred Stock) with a strike price of $2.25 per share of Non-Voting Common Stock. The Warrant has a seven-year term and is subject to anti-dilution adjustments for non-cash dividends, non-cash distributions, stock splits, subdivisions, reclassifications or combinations of Common Stock. The Capital Raise is expected to close in May 2023.

Source: Yahoo Finance

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