CALCULATION
OF REGISTRATION FEE
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Maximum
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Amount
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Aggregate
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of
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Title of
Each Class of
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Offering
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Registration
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Securities
to be Registered
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Price(1)
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Fee(2)
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8.50% Series A Non-Cumulative Perpetual Convertible
Preferred Stock, par value $0.01 per share and liquidation
preference $1,000 per share
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$
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575,000,000
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$
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22,598
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(1)
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Includes
shares of preferred stock to be sold upon exercise of the
underwriters option to purchase additional shares. See
Underwriting.
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(2)
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A filing fee
of $22,598 has been calculated in accordance with
Rule 457(r) of the Securities Act of 1933. Pursuant to
Rule 457(p) under the Securities Act of 1933, unutilized
registration fees of $3,914.59 remain from the $88,275 that was
paid with respect to unsold securities that were previously
registered pursuant to Registration Statement
No. 333-126899
and have been carried forward. The first $3,914.59 of the
$22,598 registration fee for this offering is offset against
those unutilized registration fees, leaving a remaining
registration fee of $18,683.41.
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Filed
pursuant to Rule 424(b)(2)
Registration
No. 333-131143
Prospectus
Supplement to Prospectus dated March 25, 2008
500,000
Shares
8.50%
Series A Non-Cumulative Perpetual
Convertible
Preferred Stock
Huntington
Bancshares Incorporated is offering 500,000 shares of our
8.50% Series A Non-Cumulative Perpetual Convertible
Preferred Stock, which we refer to as the Preferred Stock.
Dividends on
the Preferred Stock will be payable quarterly in arrears, when,
as and if authorized by our board of directors and declared by
us, at an annual rate of 8.50% per year on the liquidation
preference of $1,000 per share. The dividend payment dates will
be the fifteenth day of each January, April, July and October,
commencing on July 15, 2008, or the next business day if
any such day is not a business day.
Dividends on
the Preferred Stock will be non-cumulative. If for any reason
our board of directors does not authorize and we do not declare
full cash dividends on the Preferred Stock for a quarterly
dividend period, we will have no obligation to pay any dividends
for that period, whether or not our board of directors
authorizes and we declare dividends on the Preferred Stock for
any subsequent dividend period. However, with certain limited
exceptions, if we have not declared and paid or set aside for
payment full quarterly dividends on the Preferred Stock for a
particular dividend period, we may not declare or pay dividends
on, or redeem, purchase or acquire, our common stock or other
junior securities during the next succeeding dividend period.
Each share
of the Preferred Stock may be converted at any time, at the
option of the holder, into 83.6680 shares of our common
stock (which reflects an approximate initial conversion price of
$11.95 per share of our common stock) plus cash in lieu of
fractional shares, subject to anti-dilution adjustments. The
conversion rate will be adjusted as described herein upon the
occurrence of certain make-whole acquisition transactions and
other events.
The
Preferred Stock is not redeemable by us at any time. On or after
April 15, 2013, if the closing price of our common stock
exceeds 130% of the conversion price for 20 trading days during
any 30 consecutive trading day period, including the last
trading day of such period, ending on the trading day preceding
the date we give notice of mandatory conversion, we may at our
option cause some or all of the Preferred Stock to be
automatically converted into common stock at the then prevailing
conversion rate.
Our common
stock is listed on the NASDAQ Global Select Market under the
symbol HBAN. The NASDAQ Official Closing Price of
our common stock on April 16, 2008 was $9.96 per share.
The shares
of the Preferred Stock are not savings accounts, deposits or
other obligations of any bank and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other
government agency.
Investing
in the shares of the Preferred Stock involves risks. See
Risk Factors beginning on
page S-7
of this prospectus supplement and Risk Factors
beginning on page 10 of our Annual Report on
Form 10-K
for the year ended December 31, 2007.
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Per
Share
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Total
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Price to the public
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$
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1,000
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$
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500,000,000
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Underwriting discounts and commissions
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$
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30
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$
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15,000,000
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Proceeds to Huntington Bancshares (before expenses)
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$
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970
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$
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485,000,000
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We have
granted the underwriters an option exercisable for 30 days
after the date of this prospectus supplement, to purchase, from
time to time, in whole or in part, up to an aggregate of
75,000 shares of Preferred Stock to the extent the
underwriters sell more than 500,000 shares of Preferred
Stock in this offering.
Neither
the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus supplement or
the accompanying prospectus. Any representation to the contrary
is a criminal offense.
The
underwriters expect to deliver the shares of the Preferred Stock
against payment in New York, New York on or about April 22,
2008.
Joint
Book-Running Managers
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MORGAN
STANLEY |
LEHMAN BROTHERS |
Co-Managers
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The Huntington Investment
Company
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SunTrust Robinson
Humphrey
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April 16,
2008.
TABLE OF
CONTENTS
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Page
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Prospectus Supplement
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S-1
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S-9
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S-15
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S-16
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S-17
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S-18
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S-19
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S-20
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S-35
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S-36
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S-38
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S-40
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S-44
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S-49
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Prospectus
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1
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3
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4
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5
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5
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6
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6
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No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this
prospectus supplement. You must not rely on any unauthorized
information or representations. This prospectus supplement is an
offer to sell only the Preferred Stock offered hereby, but only
under circumstances and in jurisdictions where it is lawful to
do so. The information contained in this prospectus supplement
is current only as of its date.
S-i
ABOUT THIS
PROSPECTUS SUPPLEMENT
This document consists of two parts. The first part is the
prospectus supplement, which describes the specific terms of the
offering. The second part is the prospectus, which describes
more general information, some of which may not apply to the
offering. You should read both this prospectus supplement and
the accompanying prospectus, together with additional
information described under the heading Where You Can Find
More Information in the accompanying prospectus.
All references in this prospectus supplement to
Huntington, we,
us, our or similar
references mean Huntington Bancshares Incorporated and its
successors, and include our consolidated subsidiaries where the
context so requires. When we refer to the
Bank in this prospectus supplement, we mean
The Huntington National Bank, our only bank subsidiary.
If the information set forth in this prospectus supplement
differs in any way from the information set forth in the
accompanying prospectus, you should rely on the information set
forth in this prospectus supplement.
Currency amounts in this prospectus supplement are stated in
U.S. dollars.
You should rely only on the information contained in or
incorporated by reference into this prospectus supplement. This
prospectus supplement may be used only for the purpose for which
it has been prepared. No one is authorized to give information
other than that contained in this prospectus supplement and in
the documents referred to in this prospectus supplement and
which are made available to the public. We have not, and the
underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with
different or inconsistent information, you should not rely
on it.
We are not, and the underwriters are not, making an offer to
sell these securities in any jurisdiction where the offer or
sale is not permitted. You should not assume that the
information appearing in this prospectus supplement or any
document incorporated by reference is accurate as of any date
other than the date of the applicable document. Our business,
financial condition, results of operations and prospects may
have changed since that date. Neither this prospectus supplement
nor the accompanying prospectus constitutes an offer, or an
invitation on our behalf or on behalf of the underwriters, to
subscribe for and purchase, any of the securities and may not be
used for or in connection with an offer or solicitation by
anyone, in any jurisdiction in which such an offer or
solicitation is not authorized or to any person to whom it is
unlawful to make such an offer or solicitation.
S-ii
FORWARD-LOOKING
STATEMENTS
This prospectus supplement and the accompanying prospectus
contain or incorporate statements that we believe are
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Rule 175 promulgated thereunder, and Section 21E of
the Securities Exchange Act of 1934, as amended (the
Exchange Act ), and
Rule 3b-6
promulgated thereunder. These statements relate to our financial
condition, results of operations, plans, objectives, future
performance or business. They usually can be identified by the
use of forward-looking language such as will likely
result, may, are expected to,
is anticipated, estimate,
forecast, projected, intends
to, or may include other similar words or phrases such as
believes, plans, trend,
objective, continue, remain,
or similar expressions, or future or conditional verbs such as
will, would, should,
could, might, can, or
similar verbs. You should not place undue reliance on these
statements, as they are subject to risks and uncertainties,
including but not limited to those described in this prospectus
supplement, the accompanying prospectus or the documents
incorporated by reference, including the risk factors set forth
in our most recent Annual Report on
Form 10-K.
When considering these forward-looking statements, you should
keep in mind these risks and uncertainties, as well as any
cautionary statements we may make. Moreover, you should treat
these statements as speaking only as of the date they are made
and based only on information then actually known to us.
There are a number of important factors that could cause future
results to differ materially from historical performance and
these forward-looking statements. Factors that might cause such
a difference include, but are not limited to:
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competitive pressures on product pricing and services and
financial institutions generally;
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changes in the interest rate environment may reduce interest
margins;
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prepayment rates, loan originations and sale volumes,
charge-offs and loan loss provisions are inherently uncertain;
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deterioration in our loan portfolio could be worse than expected
due to a number of factors such as the underlying value of the
collateral could prove less valuable than otherwise assumed and
assumed cash flows may be worse than expected;
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general economic conditions, either nationally or in the states
in which we do business, may be less favorable than expected;
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political developments, wars or other hostilities may disrupt or
increase volatility in securities markets or otherwise affect
economic conditions;
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changes and trends in the capital markets;
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the nature, extent and timing of legislative or regulatory
changes, reforms or actions, or significant litigation, may
adversely affect the businesses in which we are engaged;
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our ability to maintain favorable ratings from rating agencies;
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effects of critical accounting policies and judgments;
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changes in accounting policies or procedures as may be required
by the Financial Accounting Standards Board or other regulatory
agencies;
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fluctuation of our stock price;
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ability to attract and retain our key personnel;
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ability to receive dividends from our subsidiaries;
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potential dilutive effect of future acquisitions on current
stockholders ownership of Huntington;
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the businesses of Huntington and that of any pending or approved
acquisition may not be integrated successfully or such
integration may take longer to accomplish than expected;
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S-iii
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the expected cost savings and any revenue synergies from
acquisitions may not be fully realized within the expected
timeframes;
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disruption from acquisitions may make it more difficult to
maintain relationships with clients, associates, or suppliers;
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the required governmental approvals of acquisitions may not be
obtained on the proposed terms and schedule;
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if required by an acquisition, Huntington
and/or the
stockholders of any pending or approved acquisition may not
approve the acquisition;
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success and timing of other business strategies;
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extended disruption of vital infrastructure;
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ability to secure confidential information through the use of
computer systems and telecommunications network; and
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the impact of reputational risk created by these developments on
such matters as business generation and retention, funding and
liquidity.
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You should refer to our periodic and current reports filed with
the Securities and Exchange Commission, or
SEC, for further information on other factors
which could cause actual results to be significantly different
from those expressed or implied by these forward-looking
statements. See Where You Can Find More Information
in the accompanying prospectus.
S-iv
SUMMARY
This summary highlights information contained elsewhere in, or
incorporated by reference into, this prospectus supplement. As a
result, it does not contain all of the information that may be
important to you or that you should consider before investing in
the Preferred Stock. You should read this entire prospectus
supplement and accompanying prospectus, including the Risk
Factors section and the documents incorporated by
reference, which are described under Where You Can Find
More Information in the accompanying prospectus.
Huntington
Bancshares Incorporated
Huntington Bancshares Incorporated is a multi-state diversified
financial holding company organized under Maryland law in 1966
and headquartered in Columbus, Ohio. Through our subsidiaries,
including our bank subsidiary, The Huntington National Bank,
organized in 1866, we provide full-service commercial and
consumer banking services, mortgage banking services, automobile
financing, equipment leasing, investment management, trust
services, brokerage services, reinsurance of private mortgage
insurance, reinsurance of credit life and disability insurance,
retail and commercial insurance agency services and other
financial products and services. Our banking offices are located
in Ohio, Michigan, Pennsylvania, Indiana, West Virginia and
Kentucky. Selected financial service activities are also
conducted in other states including: Dealer Sales offices in
Arizona, Florida, Nevada, New Jersey, New York, Tennessee and
Texas; Private Financial and Capital Markets Group offices in
Florida; and Mortgage Banking offices in Maryland and New
Jersey. Sky Insurance offers retail and commercial insurance
agency services in Ohio, Pennsylvania and Indiana. International
banking services are available through the headquarters office
in Columbus and limited purpose offices located in both the
Cayman Islands and Hong Kong.
At March 31, 2008, Huntington had, on a consolidated basis,
total assets of $56.1 billion, total deposits of
$38.1 billion and stockholders equity of
$5.9 billion.
Our common stock is traded on the NASDAQ Global Select Market
under the ticker symbol HBAN. Huntingtons
principal executive office is located at Huntington Center, 41
South High Street, Columbus, Ohio 43287, telephone number:
(614) 480-8300.
Recent
Developments
On April 15, 2008, Huntington reported its operating
results for the three months ended March 31, 2008. The
following presents an overview of those operating results.
Our net income for the quarter was $127.1 million, or $0.35
per share of common stock, compared with earnings in the
year-ago first quarter of $95.7 million, or $0.40 per share
of common stock.
Huntington also revised its 2008 full-year reported earnings
target to $1.45-$1.50 per common share, down from the previously
targeted amount of $1.57-$1.62 per common share. The reduction
primarily reflects a combination of assumption changes including
a lower net interest margin, a higher provision for loan and
lease losses, and the impact of the planned issuance of the
Preferred Stock.
In addition, we announced that our board of directors has
declared a quarterly cash dividend on our common stock of
$0.1325 per share of common stock payable July 1, 2008, to
shareholders of record on June 13, 2008. This represents a
50% reduction from the previous quarterly cash dividend of
$0.265 per share of common stock.
Performance compared with the 2007 fourth quarter included:
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Net income of $0.35 per common share, compared with a net loss
of $0.65 per common share.
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S-1
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Current quarter earnings were positively impacted by $0.03 per
common share reflecting the benefits of a gain from the
Visa®
IPO, the partial reversal of the 2007 fourth quarter
Visa®
indemnification charge, and a favorable tax benefit from the
reduction of a previously established deferred tax valuation
allowance, partially offset by net market-related losses, asset
impairment, and merger costs. The 2007 fourth quarter net loss
reflected the negative impact of $1.00 per common share
consisting of costs associated with Franklin Credit Management
Corporation (Franklin), net market-related losses,
merger costs, a
Visa®
indemnification charge, and increases to litigation reserves on
existing cases.
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$88.7 million of provision for credit losses, down from
$512.1 million in the 2007 fourth quarter. The current
quarter included no Franklin-related provision for credit
losses. In contrast, the 2007 fourth quarter total provision for
credit losses of $512.1 million consisted of
$405.8 million Franklin-related and $106.3 million
non-Franklin related provision. Non-Franklin provision for
credit losses decreased $17.7 million from
$106.3 million to $88.7 million. This reflected the
benefit of lower non-Franklin related commercial net charge-offs.
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3.23% net interest margin, down from 3.26% in the 2007 fourth
quarter. This reduction primarily reflected the asset-sensitive
nature of our balance sheet with a more rapid downward repricing
of loans compared with funding costs, primarily deposits, as
interest rates declined throughout the 2008 first quarter.
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6% annualized linked-quarter growth in average total commercial
loans and a 1% annualized linked-quarter decline in average
total consumer loans.
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2% annualized linked-quarter decline in average total core
deposits, primarily reflecting a seasonal decline in average
non-interest bearing demand deposits.
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$65.2 million linked-quarter increase in total non-interest
income, primarily reflecting the benefits of a decline in market
related losses, the current quarters gain from the
Visa®
IPO, growth in mortgage origination income, seasonal growth in
insurance income, and an increase in automobile operating lease
income, partially offset by current quarter seasonal declines in
deposit and other service charges.
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$69.1 million linked-quarter decline in total non-interest
expense. Excluding from both periods merger-related costs, the
Visa®
indemnification impacts, and automobile operating lease expense,
as well as asset impairment in the current quarter and the prior
quarters increase to litigation reserves on existing
cases, total non-interest expense increased. This increase was
due primarily to higher seasonal expenses for payroll taxes, as
well as increases in OREO and collection expenses, which more
than offset the realization of 100% of the targeted
$115 million annualized merger expense efficiencies.
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$11.1 million benefit to provision for income taxes,
representing a reduction to the previously established capital
loss carry-forward valuation allowance as a result of the 2008
first quarter
Visa®
IPO.
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$48.4 million of net charge-offs, or 0.48% of average loans
and leases. The current quarter included no Franklin-related net
charge-offs. These results compare with $377.9 million, or
3.77%, in the 2007 fourth quarter, which included
$308.5 million of Franklin-related and $69.4 million
non-Franklin related net charge-offs.
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1.53% period-end allowance for loan and lease losses
(ALLL) ratio, up from 1.44% at the end of the fourth
quarter.
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S-2
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1% increase in non-performing assets (NPAs) to
$1.678 billion from $1.660 billion at the end of the
fourth quarter, primarily reflecting:
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An 18% increase in non-accrual loans (NALs) to
$377.4 million from $319.8 million at the end of the
fourth quarter, with most of the increase in middle market
commercial real estate (CRE) loans, specifically the
single family home builder segment. Period-end NALs represented
0.92% of total loans and leases, up from 0.80% at
December 31, 2007.
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A 3% decline in the Franklin restructured loans, to
$1.157 billion from $1.187 billion. While classified
as NPAs, these loans are performing and continued to accrue
interest. Importantly, first quarter cash flows exceeded that
required by terms of the 2007 fourth quarter restructuring.
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7.55% and 10.86% period-end Tier 1 and Total risk-based
capital ratios, both increased from 7.51% and 10.85%,
respectively at December 31, 2007, and above the regulatory
well capitalized minimums of 6.0% and 10.0%,
respectively. The well capitalized level is the
highest regulatory capital designation.
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See our Current Report on
Form 8-K
filed with the SEC on April 16, 2008, which is incorporated
herein by reference (except for the information furnished under
Item 2.02 thereof and the furnished portions of
Exhibit 99.1 thereto).
S-3
The
Offering
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Issuer |
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Huntington Bancshares Incorporated, a Maryland corporation. |
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Securities Offered |
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500,000 shares of 8.50% Series A Non-Cumulative
Perpetual Convertible Preferred Stock. In addition, we have
granted the underwriters an option exercisable for 30 days
after the date of this prospectus supplement to purchase up to
75,000 additional shares of Preferred Stock to the extent
the underwriters sell more than 500,000 shares of Preferred
Stock in this offering. |
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Dividends |
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Dividends on the Preferred Stock will be payable quarterly in
arrears, when, as and if authorized by our board of directors
and declared by us out of legally available funds at an annual
rate of 8.50% on the liquidation preference of $1,000 per share. |
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Dividends on the Preferred Stock will be non-cumulative. If for
any reason our board of directors does not authorize and we do
not declare full cash dividends on the Preferred Stock for a
quarterly dividend period, we will have no obligation to pay any
dividends for that period, whether or not our board of directors
authorizes and we declare dividends on the Preferred Stock for
any subsequent dividend period. |
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Dividend Payment Dates |
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January 15, April 15, July 15 and October 15 of each
year (or the following business day if such date is not a
business day), commencing on July 15, 2008. |
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Dividend Stopper |
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With certain limited exceptions, if we have not declared and
paid or set aside for payment full quarterly dividends on the
Preferred Stock for a particular dividend period, we may not
declare or pay dividends on, or redeem, purchase or acquire, our
common stock or other junior securities during the next
succeeding dividend period. |
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Redemption |
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The Preferred Stock is not redeemable by us at any time. |
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Maturity |
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Perpetual. |
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Conversion Right |
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Each share of the Preferred Stock may be converted at any time,
at the option of the holder, into 83.6680 shares of our
common stock (which reflects an approximate initial conversion
price of $11.95 per share of our common stock) plus cash in
lieu of fractional shares, subject to anti-dilution adjustments. |
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If the conversion date is on or prior to the record date for any
declared cash dividend on the Preferred Stock for the dividend
period in which you elect to convert, you will not receive any
declared cash dividends for that dividend period. If the
conversion date is after the record date for any declared cash
dividend on the Preferred Stock and prior to the corresponding
dividend payment date, you will receive that cash dividend on
the relevant dividend payment date if you were the holder of
record on the record date for that dividend; however, whether or
not you were the holder of record on the record date, if you
convert after a record date and prior to the related dividend |
S-4
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payment date, you must pay to the conversion agent when you
convert your shares of the Preferred Stock an amount in cash
equal to the full dividend actually paid on such dividend
payment date on the shares being converted, unless your shares
are being converted as a consequence of a mandatory conversion
at our option, a make-whole acquisition or a fundamental change
as described below. |
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Mandatory Conversion at Our Option |
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On or after April 15, 2013, we may, at our option, at any
time or from time to time, cause some or all of the Preferred
Stock to be converted into shares of our common stock at the
then applicable conversion rate. We may exercise our conversion
right if, for 20 trading days within any period of 30
consecutive trading days, including the last trading day of such
period, ending on the trading day preceding the date we give
notice of mandatory conversion, the closing price of our common
stock exceeds 130% of the then applicable conversion price of
the Preferred Stock. |
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Conversion upon Certain Acquisitions |
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The following provisions will apply if one of the following
events occur: |
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a person or group within the
meaning of Section 13(d) of the Exchange Act files a
Schedule TO or any schedule, form or report under the
Exchange Act disclosing that such person or group has become the
direct or indirect ultimate beneficial owner, as
defined in
Rule 13d-3
under the Exchange Act, of our common stock representing more
than 50% of the voting power of our common stock; or
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consummation of any consolidation or merger of us or
similar transaction or any sale, lease or other transfer in one
transaction or a series of transactions of all or substantially
all of the consolidated assets of us and our subsidiaries, taken
as a whole, to any person other than one of our subsidiaries, in
each case pursuant to which our common stock will be converted
into, or receive a distribution of the proceeds in, cash,
securities or other property, other than pursuant to a
transaction in which the persons that beneficially
owned (as defined in
Rule 13d-3
under the Exchange Act) directly or indirectly, voting shares
immediately prior to such transaction beneficially own, directly
or indirectly, voting shares representing a majority of the
total voting power of all outstanding classes of voting shares
of the continuing or surviving person immediately after the
transaction.
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These transactions are referred to as make-whole
acquisitions; except that a make-whole acquisition
will not be deemed to have occurred if at least 90% of the
consideration received by holders of our common stock in the
transaction or transactions consists of shares of common stock
or American Depositary Receipts in respect of common stock that
is traded |
S-5
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on a U.S. national securities exchange or that will be so traded
when issued or exchanged. |
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Upon a make-whole acquisition, we will, under certain
circumstances, be required to pay a make-whole adjustment in the
form of an increase in the conversion rate upon any conversions
of the Preferred Stock that occur during the period beginning on
the effective date of the make-whole acquisition and ending on
the date that is 30 days after the effective date as
described herein. The make-whole adjustment will be payable in
shares of our common stock or the consideration into which our
common stock has been converted or exchanged in connection with
the make-whole acquisition. |
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The amount of the make-whole adjustment, if any, will be based
on the stock price and the effective date of the make-whole
acquisition. A description of how the make-whole adjustment will
be determined and a table showing the make-whole adjustment that
would apply at various stock prices and effective dates is set
forth under Description of Preferred Stock
Conversion upon Fundamental Change. |
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Conversion upon Fundamental Change
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If the reference price (as defined under Description of
Preferred Stock Conversion upon Fundamental
Change) in connection with a fundamental change (as
defined under Description of Preferred Stock
Conversion upon Fundamental Change) is less than the
applicable conversion price, each share of the Preferred Stock
may be converted during the period beginning on the effective
date of the fundamental change and ending on the date that is
30 days after the effective date of such fundamental change
at an adjusted conversion price equal to the greater of
(1) the reference price and (2) $4.98, which is 50% of
the closing price of our common stock on the date of this
prospectus supplement, subject to adjustment. If the reference
price is less than $4.98, holders will receive a maximum of
200.8032 shares of our common stock per share of the
Preferred Stock, subject to adjustment, which may result in a
holder receiving value that is less than the liquidation
preference of the Preferred Stock. In lieu of issuing common
stock upon conversion in the event of a fundamental change, we
may at our option, and if we obtain any necessary regulatory
approval, make a cash payment equal to the reference price for
each share of common stock otherwise issuable upon conversion. |
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See Description of Preferred Stock Conversion
upon Fundamental Change. |
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Reorganization Events (Including Mergers)
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The following provisions apply in the event of certain
reorganization events, which include, subject to
certain exceptions: |
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any consolidation or merger of us with or into
another person in each case pursuant to which our common stock
will be converted into cash, securities or other property;
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S-6
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any sale, transfer, lease or conveyance to another
person of all or substantially all of our property and assets in
each case pursuant to which our common stock will receive a
distribution of cash, securities or other property; or
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certain reclassifications of our common stock or
statutory exchanges of our securities.
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Each share of the Preferred Stock outstanding immediately prior
to the reorganization events will become convertible at the
option of the holders of the Preferred Stock into the kind of
securities, cash and other property receivable in the
reorganization event by holders of our common stock. See
Description of Preferred Stock Reorganization
Events. |
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Anti-Dilution Adjustments |
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The conversion rate may be adjusted in the event of, among other
things: |
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increases in cash dividends on our common stock,
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dividends or distributions in common stock or other
property,
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certain issuances of stock purchase rights,
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certain self tender offers or
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subdivisions, splits and combinations of the common
stock.
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See Description of Preferred Stock
Anti-Dilution Adjustments. |
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Liquidation Rights |
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Upon our voluntary or involuntary liquidation, dissolution or
winding-up,
holders of the Preferred Stock will be entitled to receive, out
of our assets that are legally available for distribution to
stockholders, before any distribution is made to holders of our
common stock or other junior securities, a liquidating
distribution in the amount of $1,000 per share of the Preferred
Stock plus any declared and unpaid dividends, without
accumulation of any undeclared dividends. Distributions will be
made pro rata as to the Preferred Stock and any other
parity securities and only to the extent of our assets, if any,
that are available after satisfaction of all liabilities to
creditors. |
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Voting Rights |
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Holders of the Preferred Stock will have no voting rights,
except with respect to certain fundamental changes in the terms
of the Preferred Stock and certain other matters. In addition,
if dividends on the Preferred Stock are not paid in full for six
dividend periods, whether consecutive or not, the holders of the
Preferred Stock, acting as a class with any other parity
securities having similar voting rights, will have the right to
elect two directors to our board. The terms of office of these
directors will end when we have paid or set aside for payment
full quarterly dividends for four consecutive dividend periods.
See Description of Preferred Stock Voting
Rights. |
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Ranking |
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The Preferred Stock will rank, with respect to the payment of
dividends and distributions upon liquidation, dissolution or
winding-up,
senior to our common stock and each other class or series of
preferred stock we may issue in the future the |
S-7
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terms of which do not expressly provide that it ranks on a
parity with or senior to the Preferred Stock as to dividend
rights and rights on liquidation,
winding-up
and dissolution of Huntington Bancshares Incorporated. The
Preferred Stock will rank on a parity with each class or series
of preferred stock we may issue in the future the terms of which
expressly provide that such class or series will rank on a
parity with the Preferred Stock as to dividend rights and rights
on liquidation, winding up and dissolution of Huntington
Bancshares Incorporated. |
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Preemptive Rights |
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None. |
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Use of Proceeds |
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We expect to receive net proceeds from the offering of the
Preferred Stock of approximately $482.5 million (or
approximately $555.25 million, if the underwriters exercise
their option to purchase additional shares of Preferred Stock in
full), after underwriting commissions and expenses. We intend to
use the net proceeds of the offering of the Preferred Stock for
general corporate purposes, including to increase our liquidity
and to increase our capital. The precise amounts and timing of
the application of proceeds will depend on the requirements of
Huntington and its subsidiaries and affiliates. See Use of
Proceeds. |
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Certain U.S. Federal Income Tax Considerations
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For a discussion of certain U.S. federal income tax
considerations of purchasing, owning, converting and disposing
of the Preferred Stock and of owning and disposing of our common
stock received in respect thereof, see Certain U.S.
Federal Income Tax Considerations. Dividends received by
non-corporate U.S. Holders, including individuals, in taxable
years beginning before January 1, 2011 generally will be
subject to reduced rates of taxation, subject to certain
conditions and limitations. Dividends paid to corporate U.S.
Holders generally should be eligible for the dividends-received
deduction, subject to certain conditions and limitations.
Dividends paid to
Non-U.S.
Holders generally should be subject to U.S. federal withholding
tax at a 30% rate, unless such rate is reduced by an applicable
tax treaty. |
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Risk Factors |
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For a discussion of risks and uncertainties involved with an
investment in our Preferred Stock and our common stock, see
Risk Factors beginning on
page S-7
of this prospectus supplement and Risk Factors
beginning on page 10 of our Annual Report on
Form 10-K
for the year ended December 31, 2007. |
Unless otherwise stated, all information contained in this
prospectus supplement assumes that the underwriters do not
exercise their option to purchase up to an aggregate of
75,000 additional shares of the Preferred Stock.
S-8
RISK
FACTORS
An investment in the Preferred Stock is subject to certain
risks. You should carefully review the following risk factors
and other information contained in this prospectus supplement
and in documents incorporated by reference in the accompanying
prospectus before deciding whether this investment is suited to
your particular circumstances.
Risks Relating to
Huntington
Our businesses are subject to a variety of credit, market,
liquidity and operational risks that investors should carefully
consider in connection with a possible investment in the
Preferred Stock.
Under the caption Risk Factors in our Annual Report
on
Form 10-K
for the year ended December 31, 2007, we have described a
number of important factors that could materially impact our
business, future results of operations and future cash flows.
They include the following:
Credit Risks:
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The largest single contributor to our net loss in the fourth
quarter of 2007, and our reduced net income in 2007 as compared
to 2006, was $405.8 million in charge-offs and special
reserves relating to our credit relationship with Franklin
Credit Management Corporation (Franklin).
There can be no assurance that we will not incur further losses
relating to the Franklin relationship.
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Our commercial real estate loan portfolio has and will continue
to be affected by the on-going correction in residential real
estate prices and reduced levels of home sales. At
March 31, 2008, we had $9.5 billion of commercial real
estate loans, including $1.7 billion of loans to builders
of single family homes. There has been a general slowdown in the
housing market across our geographic footprint, reflecting
declining prices and excess inventories of houses to be sold,
particularly impacting borrowers in our eastern Michigan and
northern Ohio markets. As a result, home builders have shown
signs of financial deterioration.
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Declines in home values and reduced levels of home sales in our
markets could continue to adversely affect us. Continuing
declines in home values are likely to lead to higher charge-offs
and delinquencies in each of our residential-related real estate
loan portfolios as compared to the pre-July 2007 historical
levels.
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The allowance for loan losses may prove inadequate or be
negatively affected by credit risk exposures.
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Market Risks:
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Changes in interest rates could negatively impact our financial
condition and results of operations.
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Liquidity Risk:
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If Huntington or the Bank were unable to borrow funds through
access to capital markets, we may not be able to meet the cash
flow requirements of our depositors and borrowers, or the
operating cash needs to fund corporate expansion and other
corporate activities.
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If our credit ratings were downgraded, the ability to access
funding sources may be negatively impacted or eliminated, and
our liquidity and the market price of our common stock could be
adversely impacted. The Bank has issued letters of credit that
support $812 million at December 31, 2007 of notes and
bonds issued by our customers. The majority of the bonds have
been sold by The Huntington Investment Company, our
broker-dealer subsidiary. A downgrade in the Banks short
term rating might influence some of the bond investors to put
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the bonds back to the remarketing agent. A failure to remarket
would require the Bank to obtain funding for the amount of notes
and bonds that cannot be remarketed.
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The Office of the Comptroller of the Currency
(OCC ) may impose dividend payment and
other restrictions on the Bank, which could impact our ability
to service our debt and to pay dividends to stockholders or
repurchase stock. Due to the significant loss that the Bank
incurred in the fourth quarter of 2007, at March 31, 2008,
the Bank could not declare and pay dividends to the holding
company without regulatory approval. We do not anticipate that
we will receive dividends from the Bank until the second half of
2008.
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Operational Risks:
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The resolution of significant pending litigation, if
unfavorable, could have a material adverse effect on our results
of operations for a particular period.
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Huntington faces significant operational risk, including
reputational risk, legal and compliance risk, the risk of fraud
or theft by employees or outsiders, unauthorized transactions by
employees or operational errors, including clerical or
record-keeping errors or those resulting from faulty or disabled
computer or telecommunications systems. Negative public opinion
can result from Huntingtons actual or alleged conduct in
any number of activities, including lending practices, corporate
governance and acquisitions and from actions taken by government
regulators and community organizations in response to those
activities. Negative public opinion can adversely affect
Huntingtons ability to attract and keep customers and can
expose it to litigation and regulatory action.
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Investors should review and carefully consider the more complete
discussion of these factors in our Annual Report or
Form 10-K
for the year ended December 31, 2007 and any subsequent
reports we filed with the SEC, which are incorporated by
reference in this prospectus supplement.
Risks Relating to
the Offering
The Preferred Stock is equity and is subordinate to all of
our existing and future indebtedness, and our ability to declare
dividends on the Preferred Stock may be limited.
Shares of the Preferred Stock are equity interests in Huntington
and do not constitute indebtedness. As such, shares of the
Preferred Stock will rank junior to all indebtedness and other
non-equity claims on Huntington with respect to assets available
to satisfy claims on Huntington, including in a liquidation of
Huntington. Additionally, unlike indebtedness, where principal
and interest would customarily be payable on specified due
dates, in the case of preferred stock like the Preferred Stock
(1) dividends are payable only when, as and if authorized
by our board of directors and declared by us and (2) as a
corporation, we are subject to restrictions on payments of
dividends and the redemption price out of lawfully available
funds.
Also, as a bank holding company, Huntingtons ability to
declare and pay dividends is dependent on certain federal
regulatory considerations. Huntington is an entity separate and
distinct from its principal subsidiary, the Bank, and depends
upon dividends from the Bank to meet its obligations to pay the
principal of and interest on its outstanding debt obligations
and corporate expenses. Huntington has issued and outstanding
debt securities under which we may defer interest payments from
time to time, but in that case we would not be permitted to pay
dividends on any of our capital stock, including the Preferred
Stock, during the deferral period. See Regulatory
Considerations.
Dividends on the Preferred Stock are
non-cumulative.
Dividends on the Preferred Stock are non-cumulative.
Consequently, if our board of directors does not authorize and
we do not declare a dividend for any dividend period, holders of
the Preferred Stock will not be entitled to receive a dividend
for such period, and such undeclared dividend will not accrue
and be payable. We will have no obligation to pay dividends for
a dividend period after the
S-10
dividend payment date for such period if our board of directors
does not authorize and we have not declared such dividend before
the related dividend payment date, whether or not dividends are
authorized and declared for any subsequent dividend period with
respect to the Preferred Stock. Our board of directors may
determine that it would be in our best interest to pay less than
the full amount of the stated dividends on the Preferred Stock
or no dividend for any quarter even if funds are available.
Factors that would be considered by our board of directors in
making this determination are our financial condition and
capital needs, the impact of current and pending legislation and
regulations, economic conditions, tax considerations, and such
other factors as our board of directors may deem relevant.
The market price of the Preferred Stock will be directly
affected by the market price of our common stock, which may be
volatile.
To the extent that a secondary market for the Preferred Stock
develops, we believe that the market price of the Preferred
Stock will be significantly affected by the market price of our
common stock. We cannot predict how the shares of our common
stock will trade in the future. This may result in greater
volatility in the market price of the Preferred Stock than would
be expected for nonconvertible preferred stock. From
January 1, 2005 to April 15, 2008, the reported high
and low sales prices for our common stock ranged from a low of
$9.64 per share to a high of $25.41 per share. The market price
of our common stock will likely continue to fluctuate in
response to a number of factors including the following, most of
which are beyond our control:
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actual or anticipated quarterly fluctuations in our operating
and financial results;
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developments related to investigations, proceedings or
litigation that involve us;
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changes in financial estimates and recommendations by financial
analysts;
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dispositions, acquisitions and financings;
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actions of our current stockholders, including sales of common
stock by existing stockholders and our directors and executive
officers;
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changes in the ratings of our other securities;
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fluctuations in the stock price and operating results of our
competitors;
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regulatory developments; and
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developments related to the financial services industry.
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The market price of our common stock may also be affected by
market conditions affecting the stock markets in general,
including price and trading fluctuations on the NASDAQ Global
Select Market. These conditions may result in
(i) volatility in the level of, and fluctuations in, the
market prices of stocks generally and, in turn, our common stock
and (ii) sales of substantial amounts of our common stock
in the market, in each case that could be unrelated or
disproportionate to changes in our operating performance. These
broad market fluctuations may adversely affect the market prices
of our common stock, and, in turn, the Preferred Stock.
In addition, we expect that the market price of the Preferred
Stock will be influenced by yield and interest rates in the
capital markets, our creditworthiness and the occurrence of
events affecting us that do not require an adjustment to the
conversion rate.
There may be future sales or other dilution of our equity,
which may adversely affect the market price of our common stock
or the Preferred Stock.
Except as described under Underwriting
Lock-Up
Agreements, we are not restricted from issuing additional
common stock or preferred stock, including any securities that
are convertible into or exchangeable for, or that represent the
right to receive, common stock or preferred stock or any
substantially similar securities. The market price of our common
stock or preferred stock could decline
S-11
as a result of sales of a large number of shares of common stock
or preferred stock or similar securities in the market after
this offering or the perception that such sales could occur.
Each share of Preferred Stock will be convertible at the option
of the holder thereof into 83.6680 shares of our common
stock, subject to anti-dilution adjustments. The conversion of
some or all of the Preferred Stock will dilute the ownership
interest of our existing common stockholders. Any sales in the
public market of our common stock issuable upon such conversion
could adversely affect prevailing market prices of the
outstanding shares of our common stock and the Preferred Stock.
In addition, the existence of our Preferred Stock may encourage
short selling or arbitrage trading activity by market
participants because the conversion of our Preferred Stock could
depress the price of our equity securities.
The issuance of additional preferred shares could
adversely affect holders of common stock, which may negatively
impact your investment.
Our board of directors is authorized to cause us to issue
additional classes or series of preferred shares without any
action on the part of the stockholders. The board of directors
also has the power, without stockholder approval, to set the
terms of any such classes or series of preferred shares that may
be issued, including voting rights, dividend rights and
preferences over the common stock with respect to dividends or
upon the liquidation, dissolution or winding up of our business
and other terms. If we issue preferred shares in the future that
have a preference over the common stock with respect to the
payment of dividends or upon liquidation, dissolution or winding
up, or if we issue preferred shares with voting rights that
dilute the voting power of the common stock, the rights of
holders of the common stock or the market price of the common
stock could be adversely affected. As noted above, a decline in
the market price of the common stock may negatively impact the
market price for the Preferred Stock.
Holders of the Preferred Stock will have no rights as
holders of common stock until they acquire the common
stock.
Until the conversion of your Preferred Stock into common stock,
you will have no rights with respect to the common stock,
including voting rights (except as described under
Description of Preferred Stock Voting
Rights), rights to respond to tender offers and rights to
receive any dividends or other distributions on the common
stock, but your investment in the Preferred Stock may be
negatively affected by these events. Upon conversion, you will
be entitled to exercise the rights of a holder of common stock
only as to matters for which the record date occurs on or after
the applicable conversion date. For example, in the event that
an amendment is proposed to our charter or bylaws requiring
stockholder approval and the record date for determining the
stockholders of record entitled to vote on the amendment occurs
prior to the conversion date, you will not be entitled to vote
on the amendment, although you will nevertheless be subject to
any changes in the powers, preferences or special rights of our
common stock that may occur as a result of such amendment.
You will have limited voting rights.
Until and unless we are in arrears on our dividend payments on
the Preferred Stock for six dividend periods, whether
consecutive or not, you will have no voting rights except with
respect to certain fundamental changes in the terms of the
Preferred Stock and certain other matters. If dividends on the
Preferred Stock are not paid in full for six dividend periods,
whether consecutive or not, the holders of Preferred Stock,
acting as a class with any other parity securities having
similar voting rights, will have the right to elect two
directors to our board. The terms of office of these directors
will end when we have paid or set aside for payment full
quarterly dividends for four consecutive dividend periods. See
Description of Preferred Stock Voting
Rights.
S-12
The Preferred Stock is a new series of securities and an
active trading market for it may not develop.
There is no public market for the Preferred Stock. The Preferred
Stock may be listed on the NASDAQ Global Select Market. There
can be no assurance, however, that a listing will be obtained or
that an active trading market will develop, or if developed,
that an active trading market will be maintained. The
underwriters have advised us that they intend to facilitate
secondary market trading by making a market in the Preferred
Stock. However, the underwriters are not obligated to make a
market in the Preferred Stock and may discontinue market making
activities at any time. If an active market is not developed or
sustained, the market price and liquidity of the Preferred Stock
may be adversely affected.
The Preferred Stock will rank junior to all of our and our
subsidiaries liabilities in the event of a bankruptcy,
liquidation or winding up.
In the event of bankruptcy, liquidation or winding up, our
assets will be available to pay obligations on the Preferred
Stock only after all of our liabilities have been paid. In
addition, the Preferred Stock will rank in parity with the other
series of preferred stock and will effectively rank junior to
all existing and future liabilities of our subsidiaries and the
capital stock (other than common stock) of the subsidiaries held
by entities or persons other than us or entities owned or
controlled by us. The rights of holders of the Preferred Stock
to participate in the assets of our subsidiaries upon any
liquidation, reorganization, receivership or conservatorship of
any subsidiary will rank junior to the prior claims of that
subsidiarys creditors and equity holders. As of
March 31, 2008, we had total consolidated liabilities of
approximately $50.1 billion. In the event of bankruptcy,
liquidation or winding up, there may not be sufficient assets
remaining, after paying our and our subsidiaries
liabilities, to pay amounts due on any or all of the Preferred
Stock then outstanding.
The conversion rate of the Preferred Stock may not be
adjusted for all dilutive events that may adversely affect the
market price of the Preferred Stock or the common stock issuable
upon conversion of the Preferred Stock.
The number of shares of our common stock that you are entitled
to receive upon conversion of a share of Preferred Stock is
subject to adjustment for certain events arising from increases
in cash dividends on our common stock, dividends or
distributions in common stock or other property, certain
issuances of stock purchase rights, certain self tender offers,
subdivisions, splits and combinations of the common stock and
certain other actions by us that modify our capital structure.
See Description of Preferred Stock
Anti-Dilution Adjustments. We will not adjust the
conversion rate for other events, including offerings of common
stock for cash by us or in connection with acquisitions. There
can be no assurance that an event that adversely affects the
value of the Preferred Stock, but does not result in an
adjustment to the conversion rate, will not occur. Further, if
any of these other events adversely affects the market price of
our common stock, it may also adversely affect the market price
of the Preferred Stock. In addition, except as described under
Underwriting
Lock-Up
Agreements, we are not restricted from offering common
stock in the future or engaging in other transactions that could
dilute our common stock.
The delivery of additional make-whole shares in respect of
conversions following a make-whole acquisition or adjustment to
the conversion rate in respect of conversions following a
fundamental change may not adequately compensate you.
If a make-whole acquisition occurs prior to conversion, we will,
under certain circumstances, increase the conversion rate in
respect of any conversions of the Preferred Stock that occur
during the period beginning on the effective date of the
make-whole acquisition and ending on the date that is
30 days after the effective date by a number of additional
shares of common stock. The number of make-whole shares, if any,
will be based on the stock price and the effective date of the
make-whole acquisition. See Description of Preferred
Stock Conversion upon Certain Acquisitions.
Although this adjustment is designed to compensate you for the
lost option value of your Preferred Stock, it is
S-13
only an approximation of such lost value and may not adequately
compensate you for your actual loss.
In addition, if a fundamental change occurs prior to conversion,
we will, under certain circumstances, increase the conversion
rate in respect of any conversions of the Preferred Stock that
occur during the period beginning on the effective date of the
fundamental change and ending on the date that is 30 days
after the effective date. See Description of Preferred
Stock Conversion upon Fundamental Change.
However, if the applicable reference price is less than $4.98,
which is 50% of the closing price of our common stock on the
date of this prospectus supplement, subject to adjustment,
holders will receive a maximum of 200.8032 shares of our
common stock per share of Preferred Stock, subject to
adjustment, which may result in a holder receiving value that is
less than the liquidation preference of the Preferred Stock.
Our obligation to deliver make-whole shares or to adjust the
conversion rate in respect of conversions following a
fundamental change could be considered a penalty, in which case
the enforceability thereof would be subject to general
principles of reasonableness, as applied to such payments.
You may be subject to tax upon an adjustment to the
conversion rate of the Preferred Stock even though you do not
receive a corresponding cash distribution.
The conversion rate of the Preferred Stock is subject to
adjustment in certain circumstances, including the payment of
cash dividends on our common stock. If the conversion rate is
adjusted as a result of a distribution that is taxable to our
common stockholders, such as a cash dividend, you will be deemed
to have received for U.S. federal income tax purposes a
taxable dividend to the extent of our current and accumulated
earnings and profits without the receipt of any cash. If you are
a Non-U.S Holder (as defined in Certain U.S. Federal
Income Tax Considerations), such deemed dividend may be
subject to U.S. federal withholding tax at a 30% rate,
unless such rate is reduced by an applicable tax treaty. It is
possible that U.S. federal tax on the deemed dividend would
be withheld from subsequent payments on the Preferred Stock or
our common stock. See Certain U.S. Federal Income Tax
Considerations.
S-14
HUNTINGTON
BANCSHARES INCORPORATED
Huntington Bancshares Incorporated is a multi-state diversified
financial holding company organized under Maryland law in 1966
and headquartered in Columbus, Ohio. Through our subsidiaries,
including our bank subsidiary, The Huntington National Bank,
organized in 1866, we provide full-service commercial and
consumer banking services, mortgage banking services, automobile
financing, equipment leasing, investment management, trust
services, brokerage services, reinsurance of private mortgage
insurance, reinsurance of credit life and disability insurance,
retail and commercial insurance agencies services and other
financial products and services. Our banking offices are located
in Ohio, Michigan, Pennsylvania, Indiana, West Virginia and
Kentucky. Selected financial service activities are also
conducted in other states including: Dealer Sales offices in
Arizona, Florida, Nevada, New Jersey, New York, Tennessee and
Texas; Private Financial and Capital Markets Group offices in
Florida; and Mortgage Banking offices in Maryland and New
Jersey. Sky Insurance offers retail and commercial insurance
agency services in Ohio, Pennsylvania and Indiana. International
banking services are available through the headquarters office
in Columbus and limited purpose offices located in both the
Cayman Islands and Hong Kong.
As a registered financial holding company, Huntington is subject
to the supervision of the Federal Reserve. Huntington is
required to file with the Federal Reserve reports and other
information regarding its business operation and the business
operations of its subsidiaries.
Huntington is a separate and distinct legal entity from the Bank
and its other subsidiaries. Huntingtons principal source
of funds for payment of principal and interest on its debt and
dividends to its stockholders, including holders of Preferred
Stock, is dividends from the Bank. Various federal and state
statutes and regulations limit the amount of dividends that the
Bank and its other subsidiaries may pay to Huntington without
regulatory approval. At December 31, 2007, the Bank could
not have declared and paid any additional dividends to
Huntington without regulatory approval. In addition, if any of
Huntingtons subsidiaries becomes insolvent, the direct
creditors of that subsidiary will have a prior claim on its
assets. Huntingtons rights and the rights of
Huntingtons creditors will be subject to that prior claim,
unless Huntington is also a direct creditor of that subsidiary.
The notes to Huntingtons consolidated financial statements
contained in its annual and quarterly filings with the SEC,
which are incorporated by reference into this prospectus
supplement and the accompanying prospectus, describe the legal
and contractual restrictions on the ability of Huntingtons
subsidiaries to make payment to Huntington of dividends, loans
or advances.
At March 31, 2008, Huntington had, on a consolidated basis
total assets of $56.1 billion, total deposits of
$38.1 billion and stockholders equity of
$5.9 billion.
Huntingtons principal executive office is located at
Huntington Center, 41 South High Street, Columbus, Ohio 43287,
telephone number:
(614) 480-8300.
If you would like to know more about us, see our documents
incorporated by reference in this prospectus supplement as
described under Where You Can Find More Information
in the accompanying prospectus.
S-15
USE OF
PROCEEDS
We expect to receive net proceeds from the offering of the
Preferred Stock of approximately $482.5 million (or
approximately $555.25 million, if the underwriters exercise
their option to purchase additional shares of Preferred Stock in
full), after underwriting commissions and expenses. We intend to
use the net proceeds of the offering of the Preferred Stock for
general corporate purposes, including to increase our liquidity
and to increase our capital. The precise amounts and timing of
the application of proceeds will depend on the requirements of
Huntington and its subsidiaries and affiliates.
S-16
CAPITALIZATION
The following table sets forth, on a consolidated basis, our
capitalization as of March 31, 2008 on an actual basis and
as adjusted to give effect to this offering, assuming that the
underwriters do not exercise their option to purchase additional
shares of Preferred Stock.
You should read the following table together with
Consolidated Selected Historical Financial Data and
our consolidated financial statements and notes thereto
incorporated by reference into this prospectus supplement and
the accompanying prospectus.
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2008
|
|
|
|
Actual
|
|
|
As Adjusted
|
|
|
|
($ in millions)
|
|
|
Deposits
|
|
$
|
38,116
|
|
|
$
|
38,116
|
|
Short-term
borrowings(1)
|
|
|
3,337
|
|
|
|
2,855
|
|
Federal Home Loan Bank advances
|
|
|
3,686
|
|
|
|
3,686
|
|
Other long-term debt
|
|
|
1,908
|
|
|
|
1,908
|
|
Subordinated notes
|
|
|
1,928
|
|
|
|
1,928
|
|
Accrued expenses and other liabilities
|
|
|
1,170
|
|
|
|
1,170
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
50,145
|
|
|
|
49,663
|
|
Stockholders equity
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
Series A Non-Cumulative Perpetual Convertible Preferred
Stock
|
|
|
|
|
|
|
500
|
|
Common stock Par value of $0.01 per share and
authorized 1,000,000,000 shares at March 31, 2008;
issued 367,007,244 shares; outstanding
366,226,146 shares
|
|
|
4
|
|
|
|
4
|
|
Capital
surplus(2)
|
|
|
5,241
|
|
|
|
5,223
|
|
Less 781,098 treasury shares at cost
|
|
|
(15
|
)
|
|
|
(15
|
)
|
Accumulated other comprehensive loss
|
|
|
(122
|
)
|
|
|
(122
|
)
|
Retained earnings
|
|
|
799
|
|
|
|
799
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders Equity
|
|
|
5,907
|
|
|
|
6,389
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity
|
|
$
|
56,052
|
|
|
$
|
56,052
|
|
|
|
|
|
|
|
|
|
|
Capital Adequacy
|
|
|
|
|
|
|
|
|
Tangible equity to total tangible assets
|
|
|
4.92
|
%
|
|
|
5.83
|
%
|
Tier 1 risk-based capital
ratio(3)
|
|
|
7.55
|
%
|
|
|
8.59
|
%
|
Total risk-based capital
ratio(3)
|
|
|
10.86
|
%
|
|
|
11.90
|
%
|
Tier 1 leverage
ratio(3)
|
|
|
6.82
|
%
|
|
|
7.76
|
%
|
|
|
|
(1) |
|
Assumes that proceeds of this offering will be deposited with
the Bank, which will apply the funds to reduce short-term
borrowings pending their application as described under
Use of Proceeds. |
|
(2) |
|
Assumes estimated expenses of this offering that are payable by
us will be approximately $2.5 million (excluding
underwriting discounts and commissions). |
|
(3) |
|
Estimated. |
S-17
REGULATORY
CONSIDERATIONS
As a financial holding company and a bank holding company under
the Bank Holding Company Act of 1956, as amended, Huntington is
subject to regulation, supervision and examination by the
Federal Reserve. For a discussion of the material elements of
the regulatory framework applicable to financial holding
companies, bank holding companies and their subsidiaries and
specific information relevant to Huntington, please refer to
Huntingtons Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, and any
subsequent reports Huntington files with the SEC, which are
incorporated by reference into the accompanying prospectus.
Dividends from the Bank are our primary source of funds for
payment of principal and interest on our debt and dividends to
our stockholders, including holders of Preferred Stock. In the
year ended December 31, 2007, the Bank declared cash
dividends to Huntington of $239 million. There are however,
statutory limits on the amount of dividends that the Bank can
pay to us without regulatory approval.
The Bank may not, without prior regulatory approval, pay a
dividend in an amount greater than its undivided profits. In
addition, the prior approval of the OCC is required for the
payment of a dividend by a national bank if the total of all
dividends declared in a calendar year would exceed the total of
its net income for the year combined with its retained net
income for the two preceding years. At December 31, 2007,
the Bank could not have declared and paid any additional
dividends to Huntington without regulatory approval. To help
meet any additional liquidity needs, Huntington has an
open-ended, automatic shelf registration statement filed and
effective with the SEC, which permits us to issue an unspecified
amount of debt or equity securities. Considering anticipated
earnings and planned issuances of debt, we believe Huntington
has sufficient liquidity to meet its cash flow obligations.
If, in the opinion of the applicable regulatory authority, a
bank under its jurisdiction is engaged in or is about to engage
in an unsafe or unsound practice, such authority may require,
after notice and hearing, that such bank cease and desist from
such practice. Depending on the financial condition of the bank,
the applicable regulatory authority might deem the bank to be
engaged in an unsafe or unsound practice if the bank were to pay
dividends. The Federal Reserve and the OCC have issued policy
statements that provide that insured banks and bank holding
companies should generally only pay dividends out of current
operating earnings.
S-18
CONSOLIDATED
SELECTED HISTORICAL FINANCIAL DATA
The following tables present selected consolidated condensed
financial data for Huntington on a historical basis and were
derived from the audited financial statements of Huntington. The
information presented in the tables should be read in
conjunction with Huntingtons consolidated financial
statements, and the related notes thereto, as incorporated by
reference into the accompanying prospectus. For more
information, see the section entitled Where You Can Find
More Information in the accompanying prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of/For The Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
Statements of Income (In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
2,742,963
|
|
|
$
|
2,070,519
|
|
|
$
|
1,641,765
|
|
|
$
|
1,347,315
|
|
|
$
|
1,305,756
|
|
Interest expense
|
|
|
1,441,451
|
|
|
|
1,051,342
|
|
|
|
679,354
|
|
|
|
435,941
|
|
|
|
456,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
1,301,512
|
|
|
|
1,019,177
|
|
|
|
962,411
|
|
|
|
911,374
|
|
|
|
848,986
|
|
Provision for credit losses
|
|
|
643,628
|
|
|
|
65,191
|
|
|
|
81,299
|
|
|
|
55,062
|
|
|
|
163,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for credit losses
|
|
|
657,884
|
|
|
|
953,986
|
|
|
|
881,112
|
|
|
|
856,312
|
|
|
|
684,993
|
|
Non-interest income
|
|
|
676,603
|
|
|
|
561,069
|
|
|
|
632,282
|
|
|
|
818,598
|
|
|
|
1,069,153
|
|
Non-interest expense
|
|
|
1,311,844
|
|
|
|
1,000,994
|
|
|
|
969,820
|
|
|
|
1,122,244
|
|
|
|
1,230,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
22,643
|
|
|
|
514,061
|
|
|
|
543,574
|
|
|
|
552,666
|
|
|
|
523,987
|
|
(Benefit) provision for income taxes
|
|
|
(52,526
|
)
|
|
|
52,840
|
|
|
|
131,483
|
|
|
|
153,741
|
|
|
|
138,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before cumulative effect of change in accounting principle
|
|
|
75,169
|
|
|
|
461,221
|
|
|
|
412,091
|
|
|
|
398,925
|
|
|
|
385,693
|
|
Cumulative effect of change in accounting principle, net of
tax(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,330
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
75,169
|
|
|
$
|
461,221
|
|
|
$
|
412,091
|
|
|
$
|
398,925
|
|
|
$
|
372,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before cumulative effect of change in accounting
principle:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.25
|
|
|
$
|
1.95
|
|
|
$
|
1.79
|
|
|
$
|
1.74
|
|
|
$
|
1.68
|
|
Diluted
|
|
|
0.25
|
|
|
|
1.92
|
|
|
|
1.77
|
|
|
|
1.71
|
|
|
|
1.67
|
|
Net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
0.25
|
|
|
|
1.95
|
|
|
|
1.79
|
|
|
|
1.74
|
|
|
|
1.62
|
|
Diluted
|
|
|
0.25
|
|
|
|
1.92
|
|
|
|
1.77
|
|
|
|
1.71
|
|
|
|
1.61
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
300,908
|
|
|
|
236,699
|
|
|
|
230,142
|
|
|
|
229,913
|
|
|
|
229,401
|
|
Diluted
|
|
|
303,455
|
|
|
|
239,920
|
|
|
|
233,475
|
|
|
|
233,856
|
|
|
|
231,582
|
|
Book value
|
|
$
|
16.24
|
|
|
$
|
12.80
|
|
|
$
|
11.41
|
|
|
$
|
10.96
|
|
|
$
|
9.93
|
|
Dividends declared
|
|
|
1.060
|
|
|
|
1.000
|
|
|
|
0.845
|
|
|
|
0.750
|
|
|
|
0.670
|
|
Financial Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
0.17
|
%
|
|
|
1.31
|
%
|
|
|
1.26
|
%
|
|
|
1.27
|
%
|
|
|
1.29
|
%
|
Return on average stockholders equity
|
|
|
1.6
|
|
|
|
15.7
|
|
|
|
16.0
|
|
|
|
16.8
|
|
|
|
17.0
|
|
Net interest margin
|
|
|
3.36
|
|
|
|
3.29
|
|
|
|
3.33
|
|
|
|
3.33
|
|
|
|
3.49
|
|
Efficiency ratio
|
|
|
62.5
|
|
|
|
59.4
|
|
|
|
60.0
|
|
|
|
65.0
|
|
|
|
63.9
|
|
Effective tax rate
|
|
|
N.M.
|
|
|
|
10.3
|
|
|
|
24.2
|
|
|
|
27.8
|
|
|
|
26.4
|
|
Net charge offs to average loans
|
|
|
1.44
|
|
|
|
0.32
|
|
|
|
0.33
|
|
|
|
0.35
|
|
|
|
0.81
|
|
Allowance for loan losses as a percentage of total loans
|
|
|
1.44
|
|
|
|
1.04
|
|
|
|
1.10
|
|
|
|
1.15
|
|
|
|
1.42
|
|
Tier 1 risk-based capital
|
|
|
7.51
|
|
|
|
8.93
|
|
|
|
9.13
|
|
|
|
9.08
|
|
|
|
8.53
|
|
Total risk-based capital
|
|
|
10.85
|
|
|
|
12.79
|
|
|
|
12.42
|
|
|
|
12.48
|
|
|
|
11.95
|
|
Tangible equity to tangible assets
|
|
|
5.08
|
|
|
|
6.93
|
|
|
|
7.19
|
|
|
|
7.18
|
|
|
|
6.80
|
|
Balance sheet Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average loans and leases
|
|
$
|
33,201,442
|
|
|
$
|
25,943,554
|
|
|
$
|
24,309,768
|
|
|
$
|
22,126,894
|
|
|
$
|
20,023,778
|
|
Average earning assets
|
|
|
39,355,933
|
|
|
|
31,451,040
|
|
|
|
29,307,603
|
|
|
|
27,697,075
|
|
|
|
24,592,170
|
|
Average total assets
|
|
|
44,711,676
|
|
|
|
35,111,236
|
|
|
|
32,639,011
|
|
|
|
31,432,746
|
|
|
|
28,971,701
|
|
Average total deposits
|
|
|
31,066,564
|
|
|
|
24,183,624
|
|
|
|
22,011,445
|
|
|
|
19,494,418
|
|
|
|
18,158,057
|
|
Average stockholders equity
|
|
|
4,631,912
|
|
|
|
2,945,597
|
|
|
|
2,582,721
|
|
|
|
2,374,137
|
|
|
|
2,196,348
|
|
Period-end loans and leases
|
|
|
40,054,338
|
|
|
|
26,153,425
|
|
|
|
24,472,166
|
|
|
|
23,560,277
|
|
|
|
21,075,118
|
|
Period-end allowance for loan losses
|
|
|
578,442
|
|
|
|
272,068
|
|
|
|
268,347
|
|
|
|
271,211
|
|
|
|
299,732
|
|
Period-end assets
|
|
|
54,697,468
|
|
|
|
35,329,019
|
|
|
|
32,764,805
|
|
|
|
32,565,497
|
|
|
|
30,519,326
|
|
Period-end stockholders equity
|
|
|
5,949,140
|
|
|
|
3,014,326
|
|
|
|
2,557,501
|
|
|
|
2,537,638
|
|
|
|
2,275,002
|
|
|
|
|
(1) |
|
Due to the adoption of FASB
Interpretation No. 46, Consolidation of Variable
Interest Entities.
N.M., not a meaningful value.
|
S-19
DESCRIPTION OF
PREFERRED STOCK
This prospectus supplement summarizes specific terms and
provisions of the Preferred Stock. Terms that apply generally to
our preferred stock are described under Description of
Huntington Capital Stock Preferred Stock. The
following summary of the terms and provisions of the Preferred
Stock does not purport to be complete and is qualified in its
entirety by reference to the pertinent sections of our charter,
including the articles supplementary classifying the Preferred
Stock, which are incorporated by reference in the registration
statement that we filed with the SEC. You should read our
charter, including the articles supplementary, for the
provisions that are important to you.
As used in this section, the terms
Huntington, us,
we or our refer to
Huntington Bancshares Incorporated and not any of its
subsidiaries.
General
Our charter authorizes the issuance of 6,617,808 shares of
serial preferred stock, par value $0.01 per share. When issued,
the Preferred Stock will constitute a single series of our
serial preferred stock, consisting of up to 575,000 shares,
par value $0.01 and liquidation preference $1,000 per share. The
holders of the Preferred Stock will have no preemptive rights.
All of the shares of the Preferred Stock, when issued and paid
for, will be validly issued, fully paid and non-assessable.
The Preferred Stock will rank, with respect to the payment of
dividends and distributions upon liquidation, dissolution or
winding-up,
(1) on a parity with each class or series of preferred
stock we may issue in the future the terms of which expressly
provide that such class or series will rank on a parity with the
Preferred Stock as to dividend rights and rights on liquidation,
winding up and dissolution of Huntington (collectively, the
parity securities) and (2) senior to our
common stock and each other class or series of preferred stock
we may issue in the future the terms of which do not expressly
provide that it ranks on a parity with or senior to the
Preferred Stock as to dividend rights and rights on liquidation,
winding-up
and dissolution of Huntington (collectively, the junior
securities). Prior to the issuance of the Preferred
Stock, no class or series of our preferred stock is outstanding.
See Description of Huntington Capital Stock
Preferred Stock for a description of our authorized
preferred shares.
We will not be entitled to issue any class or series of our
capital stock, the terms of which provide that such class or
series will rank senior to the Preferred Stock as to payment of
dividends or distribution of assets upon our liquidation,
dissolution or winding up, without the approval of the holders
of at least two-thirds of the shares of our Preferred Stock then
outstanding and any class or series of parity securities then
outstanding, voting together as a single class, with each series
or class having a number of votes proportionate to the aggregate
liquidation preference of the outstanding shares of such class
or series. See Voting Rights.
As of the date of this prospectus supplement, we are authorized
to issue up to 1,000,000,000 shares of common stock, par
value $.01 per share. As of March 31, 2008,
366,226,146 shares of common stock were issued and
outstanding.
Under Maryland law, we may declare or pay dividends on the
Preferred Stock only if after payment of such dividends we would
be able to pay our liabilities as they become due in the usual
course of business and only to the extent by which our total
assets after payment of such dividends exceed the sum of our
total liabilities. When the need to make these determinations
arises, our board of directors will determine the amount of our
total assets, total liabilities and preference amount in
accordance with Maryland law.
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Dividends
Dividends on the Preferred Stock will be payable quarterly in
arrears, when, as and if authorized by our board of directors
and declared by us out of legally available funds, on a
non-cumulative basis on the $1,000 per share liquidation
preference, at an annual rate equal to 8.50%. Subject to the
foregoing, dividends will be payable in arrears on
January 15, April 15, July 15 and October 15
of each year (each, a dividend payment date)
commencing on July 15, 2008 or, if any such day is not a
business day, the next business day. Each dividend will be
payable to holders of record as they appear on our stock
register on the first day of the month in which the relevant
dividend payment date occurs. Each period from and including a
dividend payment date (or the date of the issuance of the
Preferred Stock) to but excluding the following dividend payment
date is herein referred to as a dividend
period. Dividends payable for each dividend period
will be computed on the basis of a
360-day year
consisting of twelve
30-day
months. If a scheduled dividend payment date falls on a day that
is not a business day, the dividend will be paid on the next
business day as if it were paid on the scheduled dividend
payment date, and no interest or other amount will accrue on the
dividend so payable for the period from and after that dividend
payment date to the date the dividend is paid.
Dividends on the Preferred Stock will be non-cumulative. If for
any reason our board of directors does not authorize and we do
not declare full cash dividends on the Preferred Stock for a
dividend period, we will have no obligation to pay any dividends
for that period, whether or not our board of directors
authorizes and we declare dividends on the Preferred Stock for
any subsequent dividend period.
We are not obligated to and will not pay holders of the
Preferred Stock any interest or sum of money in lieu of interest
on any dividend not paid on a dividend payment date. We are also
not obligated to and will not pay holders of the Preferred Stock
any dividend in excess of the dividends on the Preferred Stock
that are payable as described above.
There is no sinking fund with respect to dividends.
For a discussion of the tax consequences of dividends paid on
the Preferred Stock, see Certain U.S. Federal Income
Tax Considerations U.S. Holders
Dividends and Certain U.S. Federal Income Tax
Considerations
Non-U.S. Holders
Dividends.
Dividend
Stopper
In addition, if full quarterly dividends on all outstanding
shares of the Preferred Stock for any dividend period have not
been declared and paid or set aside for payment, we will be
prohibited from declaring or paying dividends with respect to,
or redeeming, purchasing or acquiring any of, our junior
securities during the next succeeding dividend period, other
than:
(i) redemptions, purchases or other acquisitions of junior
securities in connection with any benefit plan or other similar
arrangement with or for the benefit of any one or more
employees, officers, directors or consultants or in connection
with a dividend reinvestment or stockholder stock purchase plan;
(ii) any declaration of a dividend in connection with any
stockholders rights plan, or the issuance of rights, stock
or other property under any stockholders rights plan, or
the redemption or repurchase of rights pursuant thereto; and
(iii) conversions into or exchanges for other junior
securities and cash solely in lieu of fractional shares of the
junior securities.
If dividends for any dividend payment date are not paid in full
on the shares of the Preferred Stock and there are issued and
outstanding shares of parity securities for which such dividend
payment date is also a scheduled dividend payment date, then all
dividends declared on shares of the Preferred Stock and such
parity securities on such date shall be declared pro rata
so that the respective amounts of such dividends shall bear the
same ratio to each other as full quarterly
S-21
dividends per share on the shares of the Preferred Stock and all
such parity securities otherwise payable on such date (subject
to their having been authorized by the board of directors out of
legally available funds and including, in the case of any such
parity securities that bear cumulative dividends, all accrued
but unpaid dividends) bear to each other.
Redemption
The Preferred Stock will not be redeemable either at our option
or at the option of the holders. The Preferred Stock will not be
subject to any sinking fund or other obligation to redeem,
repurchase or retire the Preferred Stock.
Optional
Conversion Right
Each share of the Preferred Stock may be converted at any time,
at the option of the holder, into 83.6680 shares of our
common stock (which reflects an approximate initial conversion
price of $11.95 per share of common stock) plus cash in
lieu of fractional shares, subject to anti-dilution adjustments
(such price or adjusted price, the conversion
price).
The conversion rate and the corresponding conversion price in
effect at any given time are referred to as the
applicable conversion rate and the
applicable conversion price, respectively,
and will be subject to adjustment as described below. The
applicable conversion price at any given time will be computed
by dividing $1,000 by the applicable conversion rate at such
time.
If the conversion date is on or prior to the record date for any
declared dividend for the dividend period in which you elect to
convert, you will not receive any declared dividends for that
dividend period. If the conversion date is after the record date
for any declared dividend and prior to the corresponding
dividend payment date, you will receive that dividend on the
relevant dividend payment date if you were the holder of record
on the record date for that dividend; however, whether or not
you were the holder of record on the record date, if you convert
after a record date and prior to the related dividend payment
date you must pay to the conversion agent when you convert your
shares of Preferred Stock an amount in cash equal to the full
dividend actually paid on such dividend payment date on the
shares being converted, unless your shares of Preferred Stock
are being converted as a consequence of a mandatory conversion
at our option, a make-whole acquisition or a fundamental change
as described below under Mandatory Conversion
at Our Option, Conversion upon Certain
Acquisitions and Conversion upon
Fundamental Change, respectively.
Mandatory
Conversion at Our Option
On or after April 15, 2013, we may, at our option, at any
time or from time to time cause some or all of the Preferred
Stock to be converted into shares of our common stock at the
then applicable conversion rate. We may exercise our conversion
right if, for 20 trading days within any period of
30 consecutive trading days, including the last trading day
of such period, ending on the trading day preceding the date we
give notice of mandatory conversion, the closing price of our
common stock exceeds 130% of the then applicable conversion
price of the Preferred Stock.
If less than all of the shares of Preferred Stock are converted,
the conversion agent will select the Preferred Stock to be
converted by lot, or on a pro rata basis or by another
method the conversion agent considers fair and appropriate,
including any method required by DTC or any successor
depositary. If the conversion agent selects a portion of your
Preferred Stock for partial mandatory conversion and you convert
a portion of the same shares of Preferred Stock, the converted
portion will be deemed to be from the portion selected for
mandatory conversion.
The closing price of the common stock on any
date of determination means the NASDAQ Official Closing Price
or, if no NASDAQ Official Closing Price is reported, the last
reported sale price of the shares of our common stock on the
NASDAQ Global Select Market on that date. If the common stock is
not traded on the NASDAQ Global Select Market on any date of
determination, the closing
S-22
price of the common stock on any date of determination means the
closing sale price as reported in the composite transactions for
the principal U.S. national or regional securities exchange
on which our common stock is so listed or quoted, or, if no
closing price is reported, the last reported sale price on the
principal U.S. national or regional securities exchange on
which our common stock is so listed or quoted, or if the common
stock is not so listed or quoted on a U.S. national or
regional securities exchange, the last quoted bid price for the
common stock in the over-the-counter market as reported by Pink
Sheets LLC or a similar organization, or, if that bid price is
not available, the market price of the common stock on that date
as determined by a nationally recognized independent investment
banking firm retained by us for this purpose.
A trading day is a day on which the shares of
our common stock:
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are not suspended from trading on any national or regional
securities exchange or association or over-the-counter market at
the close of business; and
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have traded at least once on the national or regional securities
exchange or association or over-the-counter market that is the
primary market for the trading of the common stock.
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For purposes of this prospectus supplement, all references to
the closing price and last reported sale price of the common
stock on the NASDAQ Global Select Market shall be such closing
price and last reported sale price as reflected on the website
of the NASDAQ Global Select Market
(http://www.nasdaq.com)
or any successor thereto, and as reported by Bloomberg
Professional Service or any successor thereto; except that in
the event that there is a discrepancy between the closing sale
price as reflected on the website of the NASDAQ Global Select
Market and as reported by Bloomberg Professional Service, the
closing sale price and last reported sale price on the website
of the NASDAQ Global Select Market will govern.
For purposes of calculating the closing price of our
common stock, if a reorganization event (as defined below under
Reorganization Events) has occurred and
(1) the exchange property consists only of shares of common
stock, the closing price shall be based on the
closing per share price of such common stock; (2) the exchange
property consists only of cash, the closing price
shall be the cash amount paid per share; and (3) the exchange
property consists of securities, cash and/or other property, the
closing price shall be based on the sum, as
applicable, of (x) the closing price of such common stock, (y)
the cash amount paid per share and (z) the value (as determined
by our board of directors from time-to-time) of any other
securities or property paid to our shareholders in connection
with the reorganization event.
To exercise the mandatory conversion right described above, we
must provide a notice of such conversion to each holder of our
Preferred Stock or issue a press release for publication and
make this information available on our website, if any. The
conversion date will be a date selected by us (the
mandatory conversion date) and will be no
more than 20 days after the date on which we provide such
notice of mandatory conversion or issue such press release. In
addition to any information required by applicable law or
regulation, the notice of mandatory conversion and press release
shall state, as appropriate:
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the mandatory conversion date;
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the number of shares of our common stock to be issued upon
conversion of each share of Preferred Stock; and
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the number of shares of Preferred Stock to be converted.
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Conversion
Procedures
Conversion into shares of our common stock will occur on the
mandatory conversion date or any applicable conversion date (as
defined below). On the mandatory conversion date, shares of our
common stock will be issued to you or your designee upon
presentation and surrender of the certificate evidencing the
Preferred Stock to the conversion agent if shares of the
Preferred Stock are
S-23
held in certificated form, and upon compliance with some
additional procedures described below. If a holders
interest is a beneficial interest in a global certificate
representing Preferred Stock, a book-entry transfer through DTC
will be made by the conversion agent upon compliance with the
depositarys procedures for converting a beneficial
interest in a global security.
On the date of any conversion at the option of a holder, if the
holders interest is in certificated form, the holder must
do each of the following in order to convert:
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complete and manually sign the conversion notice provided by the
conversion agent, or a facsimile of the conversion notice, and
deliver this irrevocable notice to the conversion agent;
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surrender the shares of Preferred Stock to the conversion agent;
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if required, furnish appropriate endorsements and transfer
documents;
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if required, pay all transfer or similar taxes; and
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if required, pay funds equal to any declared and unpaid dividend
payable on the next dividend payment date to which such holder
is entitled.
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If a holders interest is a beneficial interest in a global
certificate representing Preferred Stock, in order to convert
such holder must comply with the last three requirements listed
above and comply with the depositarys procedures for
converting a beneficial interest in a global security.
The date on which a holder complies with the foregoing
procedures is the conversion date.
The conversion agent for the Preferred Stock is initially the
transfer agent. A holder may obtain a copy of the required form
of the conversion notice from the conversion agent. The
conversion agent will, on a holders behalf, convert the
Preferred Stock into shares of our common stock, in accordance
with the terms of the notice delivered by us described above.
Payments of cash for dividends and in lieu of fractional shares
and, if shares of our common stock are to be delivered, a stock
certificate or certificates, will be delivered to the holder, or
in the case of global certificates or uncertificated shares, a
book-entry transfer through DTC will be made by the conversion
agent.
The person or persons entitled to receive the shares of common
stock issuable upon conversion of the Preferred Stock will be
treated as the record holder(s) of such shares as of the close
of business on the applicable conversion date. Prior to the
close of business on the applicable conversion date, the shares
of common stock issuable upon conversion of the Preferred Stock
will not be deemed to be outstanding for any purpose and you
will have no rights with respect to the common stock, including
voting rights, rights to respond to tender offers and rights to
receive any dividends or other distributions on the common
stock, by virtue of holding the Preferred Stock.
Conversion upon
Certain Acquisitions
General. The following provisions will apply if,
prior to the conversion date, one of the following events occur:
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a person or group within the meaning of
Section 13(d) of the Exchange Act files a Schedule TO
or any schedule, form or report under the Exchange Act
disclosing that such person or group has become the direct or
indirect ultimate beneficial owner, as defined in
Rule 13d-3
under the Exchange Act, of our common stock representing more
than 50% of the voting power of our common stock; or
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consummation of any consolidation or merger of us or similar
transaction or any sale, lease or other transfer in one
transaction or a series of transactions of all or substantially
all of the consolidated assets of us and our subsidiaries, taken
as a whole, to any person other than one of our subsidiaries, in
each case pursuant to which our common stock will be converted
into or receive a distribution of the proceeds in, cash,
securities or other property, other than pursuant to a
transaction in which the persons that beneficially
owned (as defined in
Rule 13d-3
under the Exchange Act) directly or indirectly, voting shares
immediately prior to such transaction beneficially own, directly
or indirectly, voting shares representing a majority of
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S-24
the total voting power of all outstanding classes of voting
shares of the continuing or surviving person immediately after
the transaction.
These transactions are referred to as make-whole
acquisitions; except that a make-whole acquisition
will not be deemed to have occurred if at least 90% of the
consideration received by holders of our common stock in the
transaction or transactions consists of shares of common stock
or American Depositary Receipts in respect of common stock that
are traded on a U.S. national securities exchange or that
will be so traded when issued or exchanged.
The phrase all or substantially all of our assets is
likely to be interpreted by reference to applicable state law at
the relevant time, and will be dependent on the facts and
circumstances existing at such time. As a result, there may be a
degree of uncertainty in ascertaining whether a sale or transfer
is of all or substantially all of our assets.
Upon a make-whole acquisition, we will, under certain
circumstances, increase the conversion rate in respect of any
conversions of the Preferred Stock that occur during the period
(the make-whole acquisition conversion
period) beginning on the effective date of the
make-whole acquisition (the effective date)
and ending on the date that is 30 days after the effective
date, by a number of additional shares of common stock (the
make-whole shares) as described below.
We will notify holders, at least 20 days prior to the
anticipated effective date of such make-whole acquisition or
within two business days of becoming aware of a make-whole
acquisition described in the first bullet of the definition of
make-whole acquisition, of the anticipated effective
date of such transaction. The notice will specify the
anticipated effective date of the make-whole acquisition and the
date by which each holders make-whole acquisition
conversion right must be exercised. We will also notify holders
on the effective date of such make-whole acquisition specifying,
among other things, the date by which the holders
make-whole acquisition conversion right must be exercised (which
is 30 days after the effective date), the number of
make-whole shares and the amount of the cash, securities and
other consideration receivable by the holder upon conversion. To
exercise the make-whole acquisition conversion right, a holder
must deliver to the conversion agent, on or before the close of
business on the date specified in the notice, the certificate
evidencing such holders shares of the Preferred Stock, if
the shares of Preferred Stock are held in certificated form. If
a holders interest is a beneficial interest in a global
certificate representing Preferred Stock, in order to convert a
holder must comply with the requirements listed above under
Conversion Procedures and comply with
the depositarys procedures for converting a beneficial
interest in a global security. The date that the holder complies
with these requirements is referred to as the
make-whole conversion date. If a holder does
not elect to exercise the make-whole acquisition conversion
right, such holders shares of the Preferred Stock will
remain outstanding but will not be eligible to receive
make-whole shares.
Make-Whole Shares. The following table sets
forth the number of make-whole shares per share of Preferred
Stock for each stock price and effective date set forth below:
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Stock Price
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Effective Date
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$9.96
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$11.00
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$12.00
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$15.00
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$18.00
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$21.00
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$25.00
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$30.00
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$35.00
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$40.00
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$45.00
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$55.00
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$75.00
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$100.00
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April 22, 2008
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16.7336
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15.1515
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13.8889
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11.1111
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9.2593
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7.9365
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6.3892
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4.8823
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3.9124
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3.2340
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2.7308
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2.0296
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1.2279
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0.7067
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April 15, 2009
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16.7336
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15.1515
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13.8889
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11.1111
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9.1734
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7.0636
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5.3445
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4.0645
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3.2573
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2.6980
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2.2843
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1.7067
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1.0405
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0.6017
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April 15, 2010
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16.7336
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15.1515
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13.8889
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10.7040
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7.4705
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5.6201
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4.1862
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3.1678
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2.5437
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2.1156
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1.7989
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1.3543
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0.8346
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0.4867
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April 15, 2011
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16.7336
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15.1515
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13.8889
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8.5255
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5.5674
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4.0178
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2.9242
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2.2090
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1.7871
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1.4984
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1.2828
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0.9759
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0.6112
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0.3630
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April 15, 2012
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16.7336
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15.1515
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12.1688
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5.8987
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3.2603
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2.1521
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1.5345
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1.1875
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0.9818
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0.8344
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0.7208
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0.5558
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0.3579
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0.2218
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April 15, 2013
and after
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16.7336
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14.4346
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10.2869
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1.2849
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0.0005
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0.0006
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0.0006
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0.0001
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0.0000
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0.0000
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0.0000
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0.0000
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0.0000
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0.0000
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The number of make-whole shares will be determined by reference
to the table above and is based on the effective date and the
price (the stock price) paid per share of our
common stock in such transaction. If the holders of our shares
of common stock receive only cash in the make-whole acquisition,
the stock price shall be the cash amount paid per share.
Otherwise the stock price shall
S-25
be the average of the closing price per share of our common
stock on the 10 trading days up to but not including the
effective date.
The stock prices set forth in the first row of the table
(i.e., the column headers) will be adjusted as of any
date on which the conversion rate of the Preferred Stock is
adjusted. The adjusted stock prices will equal the stock prices
applicable immediately prior to such adjustment multiplied by a
fraction, the numerator of which is the conversion rate
immediately prior to the adjustment giving rise to the stock
price adjustment and the denominator of which is the conversion
rate as so adjusted. Each of the number of make-whole shares in
the table will be subject to adjustment in the same manner as
the conversion rate as set forth under
Anti-Dilution Adjustments.
The exact stock price and effective dates may not be set forth
on the table, in which case:
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if the stock price is between two stock price amounts on the
table or the effective date is between two dates on the table,
the number of make-whole shares will be determined by
straight-line interpolation between the number of make-whole
shares set forth for the higher and lower stock price amounts
and the two dates, as applicable, based on a
365-day year;
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if the stock price is in excess of $100 per share (subject
to adjustment as described above), no make-whole shares will be
issued upon conversion of the Preferred Stock; and
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if the stock price is less than $9.96 per share (subject to
adjustment as described above), no make-whole shares will be
issued upon conversion of the Preferred Stock.
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Our obligation to deliver make-whole shares could be considered
a penalty, in which case the enforceability thereof would be
subject to general principles of reasonableness, as applied to
such payments.
Conversion upon
Fundamental Change
If the reference price (as defined below) in connection with a
fundamental change (as defined below) is less than the
applicable conversion price each share of Preferred Stock may be
converted during the period beginning on the effective date of
the fundamental change and ending on the date that is
30 days after the effective date of such fundamental change
at an adjusted conversion price equal to the greater of
(1) the reference price and (2) $4.98, which is 50% of
the closing price of our common stock on the date of this
prospectus supplement, subject to adjustment (the base
price). The base price will be adjusted as of any date
the conversion rate of the Preferred Stock is adjusted. The
adjusted base price will equal the base price applicable
immediately prior to such adjustment multiplied by a fraction,
the numerator of which is the conversion rate immediately prior
to the adjustment giving rise to the stock price adjustment and
the denominator of which is the conversion rate as so adjusted.
If the reference price is less than the base price, holders will
receive a maximum of 200.8032 shares of our common stock
per share of Preferred Stock, subject to adjustment, which may
result in a holder receiving value that is less than the
liquidation preference of the Preferred Stock. In lieu of
issuing common stock upon conversion in the event of a
fundamental change, we may at our option, and if we obtain any
necessary regulatory approval, make a cash payment equal to the
reference price for each share of common stock otherwise
issuable upon conversion.
The reference price is the price per share of
common stock in connection with such fundamental change. If the
holders of our shares of common stock receive only cash in the
fundamental change, the reference price shall be the cash amount
paid per share. Otherwise the reference price shall be the
average of the closing price per share of our common stock on
the 10 trading days up to but not including the effective
date of the fundamental change.
A fundamental change will have deemed to have
occurred upon the occurrence of any of the following:
(a) a person or group within the
meaning of Section 13(d) of the Exchange Act files a
Schedule TO or any schedule, form or report under the
Exchange Act disclosing that such person or group has become the
direct or indirect ultimate beneficial owner, as
defined in
Rule 13d-3
under the
S-26
Exchange Act, of our common stock representing more than 50% of
the voting power of our common stock; or
(b) consummation of any consolidation or merger of us or
similar transaction or any sale, lease or other transfer in one
transaction or a series of transactions of all or substantially
all of the consolidated assets of us and our subsidiaries, taken
as a whole, to any person other than one of our subsidiaries, in
each case pursuant to which our shares of common stock will be
converted into or receive a distribution of the proceeds in,
cash, securities or other property, other than pursuant to a
transaction in which the persons that beneficially
owned (as defined in
Rule 13d-3
under the Exchange Act) directly or indirectly, voting shares
immediately prior to such transaction beneficially own, directly
or indirectly, voting shares representing a majority of the
total voting power of all outstanding classes of voting shares
of the continuing or surviving person immediately after the
transaction; or
(c) if shares of our common stock, or shares of any other
stock into which the Preferred Stock is convertible are not
listed for trading on any United States national securities
exchange or cease to be traded in contemplation of a delisting
(other than as a result of a transaction described in paragraph
(b) above);
provided, however, that a fundamental change with respect
to clauses (a) or (b) above will not be deemed to have
occurred if at least 90% of the consideration in the transaction
or transactions consists of common stock or American Depositary
Receipts in respect of common stock that are traded on a
U.S. national securities exchange or that will be so traded
when issued or exchanged in connection with a fundamental change.
The phrase all or substantially all of our assets is
likely to be interpreted by reference to applicable state law at
the relevant time, and will be dependent on the facts and
circumstances existing at such time. As a result, there may be a
degree of uncertainty in ascertaining whether a sale or transfer
is of all or substantially all of our assets.
Reorganization
Events
In the event of:
(a) any consolidation or merger of us with or into another
person in each case pursuant to which our common stock will be
converted into cash, securities or other property of us or
another person;
(b) any sale, transfer, lease or conveyance to another
person of all or substantially all of our property and assets,
in each case pursuant to which our common stock will receive a
distribution of cash, securities or other property;
(c) any reclassification of the common stock into
securities, including securities other than the common
stock; or
(d) any statutory exchange of our securities with another
person (other than in connection with a merger or acquisition),
each of which is referred to as a reorganization
event, each share of the Preferred Stock outstanding
immediately prior to such reorganization event will, without the
consent of the holders of the Preferred Stock, become
convertible into the kind of securities, cash and other property
receivable in such reorganization event by a holder of the
shares of our common stock that was not the counterparty to the
reorganization event or an affiliate of such other party (such
securities, cash and other property, the exchange
property). In the event that holders of the shares of
our common stock have the opportunity to elect the form of
consideration to be received in such transaction, the
consideration that the holders of the Preferred Stock are
entitled to receive will be deemed to be the types and amounts
of consideration received by the majority of the holders of the
shares of our common stock that affirmatively make an election.
Holders have the right to convert their shares of Preferred
Stock in the
S-27
event of certain acquisitions as described under
Conversion upon Certain Acquisitions and
Conversion upon Fundamental Change. In
connection with certain reorganization events, holders of the
Preferred Stock may have the right to vote as a class, see
Voting Rights.
Anti-Dilution
Adjustments
The conversion rate will be adjusted in the following
circumstances:
(1) Stock Dividend Distributions. If we pay
dividends or other distributions on the common stock in common
stock, then the conversion rate in effect immediately prior to
the ex-date for such dividend or distribution will be multiplied
by the following fraction:
OS1
OSo
Where,
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|
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OSo
= |
|
the number of shares of common stock outstanding immediately
prior to ex-date for such dividend or distribution. |
|
OS1
= |
|
the sum of the number of shares of common stock outstanding
immediately prior to the ex-date for such dividend or
distribution plus the total number of shares of our common stock
constituting such dividend. |
(2) Subdivisions, Splits and Combination of the Common
Stock. If we subdivide, split or combine the shares of
common stock, then the conversion rate in effect immediately
prior to the effective date of such share subdivision, split or
combination will be multiplied by the following fraction:
OS1
OSo
Where,
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|
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OSo
= |
|
the number of shares of common stock outstanding immediately
prior to the effective date of such share subdivision, split or
combination. |
|
OS1
= |
|
the number of shares of common stock outstanding immediately
after the opening of business on the effective date of such
share subdivision, split or combination. |
(3) Issuance of Stock Purchase Rights. If we issue
to all or substantially all holders of the shares of our common
stock rights or warrants (other than rights or warrants issued
pursuant to a dividend reinvestment plan or share purchase plan
or other similar plans) entitling them, for a period of up to
45 days from the date of issuance of such rights or
warrants, to subscribe for or purchase the shares of our common
stock at less than the current market price, as defined below,
of the common stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, then
the conversion rate in effect immediately prior to the ex-date
for such distribution will be multiplied by the following
fraction:
OSo
+ X
OSo
+ Y
Where,
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OSo
= |
|
the number of shares of common stock outstanding immediately
prior to the ex-date for such distribution. |
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X = |
|
the total number of shares of common stock issuable pursuant to
such rights or warrants. |
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Y = |
|
the number of shares of common stock equal to the aggregate
price payable to exercise such rights or warrants divided by the
current market price. |
S-28
To the extent that such rights or warrants are not exercised
prior to their expiration or shares of our common stock are
otherwise not delivered pursuant to such rights or warrants upon
the exercise of such rights or warrants, the conversion rate
shall be readjusted to such conversion rate that would then be
in effect had the adjustment made upon the issuance of such
rights or warrants been made on the basis of the delivery of
only the number of shares of our common stock actually
delivered. In determining the aggregate offering price payable
for such shares of our common stock, there shall be taken into
account any consideration received for such rights or warrants
and the value of such consideration (if other than cash, to be
determined by our board of directors).
(4) Debt or Asset Distributions. If we distribute to
all or substantially all holders of shares of our common stock
evidences of indebtedness, shares of capital stock, securities,
cash or other assets (excluding any dividend or distribution
referred to in clause (1) above, any rights or warrants
referred to in clause (3) above, any dividend or
distribution paid exclusively in cash, any consideration payable
in connection with a tender or exchange offer made by us or any
of our subsidiaries, and any dividend of shares of capital stock
of any class or series, or similar equity interests, of or
relating to a subsidiary or other business unit in the case of
certain spin-off transactions as described below), then the
conversion rate in effect immediately prior to the ex-date for
such distribution will be multiplied by the following fraction:
SP0
SP0 −
FMV
Where,
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SP0
= |
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the current market price per share of common stock on such date. |
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FMV = |
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the fair market value of the portion of the distribution
applicable to one share of common stock on such date as
determined by our board of directors. |
In a spin-off, where we make a distribution to all
or substantially all holders of our shares of common stock
consisting of capital stock of any class or series, or similar
equity interests of, or relating to, a subsidiary or other
business unit, the conversion rate will be adjusted on the
fifteenth trading day after the effective date of the
distribution by multiplying such conversion rate in
effect immediately prior to such fifteenth trading day by the
following fraction:
MP0
+ MPs
MP0
Where,
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MP0
= |
|
the average of the closing prices of the common stock over the
first ten trading days commencing on and including the fifth
trading day following the effective date of such distribution. |
|
MPs = |
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the average of the closing prices of the capital stock or equity
interests representing the portion of the distribution
applicable to one share of common stock over the first ten
trading days commencing on and including the fifth trading day
following the effective date of such distribution, or, if not
traded on a national or regional securities exchange or
over-the-counter market, the fair market value of the capital
stock or equity interests representing the portion of the
distribution applicable to one share of our common stock on such
date as determined by our board of directors. |
(5) Cash Distributions. If we make a distribution
consisting exclusively of cash to all or substantially all
holders of the common stock, excluding (a) any cash
dividend on the common stock to the extent that the aggregate
cash dividend per share of the common stock does not exceed
$0.1325 in any fiscal quarter (the dividend threshold
amount ), (b) any cash that is distributed
in a reorganization event (as described below) or as part of a
spin-off referred to in clause (4) above,
(c) any dividend or distribution in connection with our
liquidation, dissolution or winding up, and (d) any
consideration payable in connection with a tender or exchange
offer made by us or any of our subsidiaries, then in
S-29
each event, the conversion rate in effect immediately prior to
the ex-date for such distribution will be multiplied by the
following fraction:
SP0
SP0 −
DIV
Where,
|
|
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SP0
= |
|
the closing price per share of common stock on the ex-date. |
|
DIV = |
|
the amount per share of common stock of the dividend or
distribution, as determined pursuant to the following paragraph. |
If an adjustment is required to be made as set forth in this
clause as a result of a distribution (1) that is a
regularly scheduled quarterly dividend, such adjustment would be
based on the amount by which such dividend exceeds the dividend
threshold amount or (2) that is not a regularly scheduled
quarterly dividend, such adjustment would be based on the full
amount of such distribution.
The dividend threshold amount is subject to adjustment on an
inversely proportional basis whenever the conversion rate is
adjusted; provided that no adjustment will be made to the
dividend threshold amount for any adjustment made to the
conversion rate pursuant to this clause (5).
(6) Self Tender Offers and Exchange Offers. If we or
any of our subsidiaries successfully complete a tender or
exchange offer for our common stock where the cash and the value
of any other consideration included in the payment per share of
the common stock exceeds the closing price per share of the
common stock on the trading day immediately succeeding the
expiration of the tender or exchange offer, then the conversion
rate in effect at the close of business on such immediately
succeeding trading day will be multiplied by the following
fraction:
AC +
(SP0
×
OS1)
OS0
×
SP0
Where,
|
|
|
SP0
= |
|
the closing price per share of common stock on the trading day
immediately succeeding the expiration of the tender or exchange
offer. |
|
OS0
= |
|
the number of shares of common stock outstanding immediately
prior to the expiration of the tender or exchange offer,
including any shares validly tendered and not withdrawn. |
|
OS1
= |
|
the number of shares of common stock outstanding immediately
after the expiration of the tender or exchange offer. |
|
AC = |
|
the aggregate cash and fair market value of the other
consideration payable in the tender or exchange offer, as
determined by our board of directors. |
In the event that we are, or one of our subsidiaries is,
obligated to purchase shares of our common stock pursuant to any
such tender offer or exchange offer, but we are, or such
subsidiary is, permanently prevented by applicable law from
effecting any such purchases, or all such purchases are
rescinded, then the conversion rate shall be readjusted to be
such conversion rate that would then be in effect if such tender
offer or exchange offer had not been made.
(7) Rights Plans. To the extent that we have a
rights plan in effect with respect to the common stock on any
conversion date, upon conversion of any shares of the Preferred
Stock, you will receive, in addition to the shares of our common
stock, the rights under the rights plan, unless, prior to such
conversion date, the rights have separated from the shares of
our common stock, in which case the conversion rate will be
adjusted at the time of separation as if we made a distribution
to all holders of the common stock as described in
clause (4) above, subject to readjustment in the event of
the expiration, termination or redemption of such rights.
S-30
In addition, we may make such increases in the conversion rate
as we deem advisable in order to avoid or diminish any income
tax to holders of the common stock resulting from any dividend
or distribution of the shares (or issuance of rights or warrants
to acquire the shares) or from any event treated as such for
income tax purposes or for any other reason.
For a discussion of the tax consequences of a change in the
conversion rate, see Certain U.S. Federal Income Tax
Considerations U.S. Holders
Adjustment of the Conversion Rate and Certain
U.S. Federal Income Tax Considerations
Non-U.S. Holders
Adjustment of the Conversion Rate in this prospectus
supplement.
Adjustments to the conversion rate will be calculated to the
nearest 1/10,000th of a share. No adjustment in the
conversion rate will be required unless the adjustment would
require an increase or decrease of at least one percent in the
conversion rate. If any adjustment is not required to be made
because it would not change the conversion rate by at least one
percent, then the adjustment will be carried forward and taken
into account in any subsequent adjustment; provided that
on a mandatory conversion date or the effective date of a
make-whole acquisition or a fundamental change, adjustments to
the conversion rate will be made with respect to any such
adjustment carried forward that has not been taken into account
before such date.
No adjustment to the conversion rate will be made if holders may
participate in the transaction that would otherwise give rise to
such adjustment as a result of holding the Preferred Stock,
without having to convert the Preferred Stock, as if they held
the full number of shares of common stock into which a share of
the Preferred Stock may then be converted.
The applicable conversion rate will not be adjusted:
(a) upon the issuance of any shares of common stock
pursuant to any present or future plan providing for the
reinvestment of dividends or interest payable on the securities
and the investment of additional optional amounts in common
stock under any plan;
(b) upon the issuance of any shares of common stock or
rights or warrants to purchase those shares pursuant to any
present or future employee, director or consultant benefit plan
or program of or assumed by us or any of our subsidiaries;
(c) upon the issuance of any shares of common stock
pursuant to any option, warrant, right or exercisable,
exchangeable or convertible security outstanding as of the date
the shares of Preferred Stock were first issued;
(d) for a change in the par value or no par value of the
common stock; or
(e) for accrued and unpaid dividends on the Preferred Stock.
We will be required, as soon as practicable after the conversion
rate is adjusted, to provide or cause to be provided written
notice of the adjustment to the holders of shares of Preferred
Stock. We will also be required to deliver a statement setting
forth in reasonable detail the method by which the adjustment to
the conversion rate was determined and setting forth the revised
conversion rate.
The current market price on any date is the
average of the daily closing price per share of the common stock
or other securities on each of the five consecutive trading days
preceding the earlier of the day before the date in question and
the day before the ex-date with respect to the
issuance or distribution requiring such computation. The term
ex-date, when used with respect to any such
issuance or distribution, means the first date on which the
common stock or other securities trade without the right to
receive such issuance or distribution.
Fractional
Shares
No fractional shares of our common stock will be issued to
holders of the Preferred Stock upon conversion. In lieu of any
fractional shares of common stock otherwise issuable in respect
of the aggregate number of shares of the Preferred Stock of any
holder that are converted, that holder will
S-31
be entitled to receive an amount in cash (computed to the
nearest cent) equal to the same fraction of the closing price
per share of our common stock determined as of the second
trading day immediately preceding the effective date of
conversion.
If more than one share of the Preferred Stock is surrendered for
conversion at one time by or for the same holder, the number of
full shares of common stock issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares
of Preferred Stock so surrendered.
Common Stock
Rights
Reference is made to the Description of Huntington Capital
Stock Common Stock for a description of the
rights of holders of common stock to be delivered upon
conversion of the Preferred Stock.
Liquidation
Rights
In the event that we voluntarily or involuntarily liquidate,
dissolve or wind up, the holders of Preferred Stock at the time
outstanding will be entitled to receive liquidating
distributions in the amount of $1,000 per share of Preferred
Stock, plus an amount equal to any declared but unpaid dividends
thereon, out of assets legally available for distribution to our
stockholders, before any distribution of assets is made to the
holders of our common stock or any other junior securities.
After payment of the full amount of such liquidating
distributions, the holders of Preferred Stock will not be
entitled to any further participation in any distribution of
assets by us, and will have no right or claim to any of our
remaining assets.
In the event that our assets available for distribution to
stockholders upon any liquidation, dissolution or
winding-up
of our affairs, whether voluntary or involuntary, are
insufficient to pay in full the amounts payable with respect to
all outstanding shares of the Preferred Stock and the
corresponding amounts payable on any parity securities, the
holders of Preferred Stock and the holders of such other parity
securities will share ratably in any distribution of our assets
in proportion to the full respective liquidating distributions
to which they would otherwise be respectively entitled.
For such purposes, our consolidation or merger with or into any
other entity, the consolidation or merger of any other entity
with or into us, or the sale of all or substantially all of our
property or business, will not be deemed to constitute our
liquidation, dissolution, or
winding-up.
Voting
Rights
Except as indicated below, the holders of Preferred Stock will
not have any voting rights.
Right to Elect Two Directors upon Non-Payment of
Dividends. If and when the dividends on the Preferred
Stock or on any other class or series of our parity securities
that has voting rights equivalent to those described in this
prospectus supplement, have not been declared and paid
(i) in the case of the Preferred Stock and parity
securities bearing non-cumulative dividends, in full for at
least six quarterly dividend periods or their equivalent
(whether or not consecutive), or (ii) in the case of parity
securities bearing cumulative dividends, in an aggregate amount
equal to full dividends for at least six quarterly dividend
periods or their equivalent (whether or not consecutive), the
authorized number of directors then constituting our board of
directors will be automatically increased by two. Holders of
Preferred Stock, together with the holders of all other affected
classes and series of parity securities, voting as a single
class, with each series or class having a number of votes
proportionate to the aggregate liquidation preference of the
outstanding shares of such class or series, will be entitled to
elect the two additional members of our board of directors (the
Preferred Stock Directors) at any
annual or special meeting of stockholders at which directors are
to be elected or any special meeting of the holders of Preferred
Stock and any parity securities for which dividends have not
been paid, called as provided below, but only if the election of
any Preferred Stock Directors would not cause us to violate the
corporate governance requirement of the NASDAQ Global Select
S-32
Market (or any other exchange on which our securities may be
listed) that listed companies must have a majority of
independent directors. In addition, our board of directors shall
at no time have more than two Preferred Stock Directors.
At any time after this voting power has vested as described
above, our Secretary may, and upon the written request of
holders of record of at least 20% of the outstanding shares of
Preferred Stock and such parity securities (addressed to the
Secretary at our principal office) must, call a special meeting
of the holders of Preferred Stock and such parity securities for
the election of the Preferred Stock Directors. Notice for a
special meeting will be given in a similar manner to that
provided in our bylaws for a special meeting of the
stockholders, which we will provide upon request, or as required
by law. If our Secretary is required to call a meeting but does
not do so within 20 days after receipt of any such request,
then any holder of shares of Preferred Stock may (at our
expense) call such meeting, upon notice as provided in this
section, and for that purpose will have access to our stock
books. The Preferred Stock Directors elected at any such special
meeting will hold office until the next annual meeting of our
stockholders unless they have been previously terminated as
described below. In case any vacancy occurs among the Preferred
Stock Directors, a successor will be elected by our board of
directors to serve until the next annual meeting of the
stockholders upon the nomination of the remaining Preferred
Stock Director or if none remains in office, by the vote of the
holders of record of the outstanding shares of Preferred Stock
and all parity securities, voting as a single class, with each
series or class having a number of votes proportionate to the
aggregate liquidation preference of the outstanding shares of
such class or series. The Preferred Stock Directors shall each
be entitled to one vote per director on any matter.
Whenever full dividends have been paid or set aside for payment
on the Preferred Stock and any non-cumulative parity securities
for at least four consecutive dividend periods and all dividends
on any cumulative parity securities have been paid in full, then
the right of the holders of Preferred Stock to elect the
Preferred Stock Directors will cease (but subject always to the
same provisions for the vesting of these voting rights in the
case of any similar non-payment of dividends in respect of
future Dividend Periods), the terms of office of all Preferred
Stock Directors will immediately terminate and the number of
directors constituting our board of directors will be
automatically reduced accordingly.
Other Voting Rights. So long as any shares of
Preferred Stock are outstanding, in addition to any other vote
or consent of stockholders required by our charter, the vote or
consent of the holders of at least two-thirds of the outstanding
shares of Preferred Stock and any class or series of parity
securities with similar rights then outstanding, voting together
as a single class, with each series or class having a number of
votes proportionate to the aggregate liquidation preference of
the outstanding shares of such class or series, given in person
or by proxy, either in writing without a meeting or by vote at
any meeting called for the purpose, shall be necessary for
effecting or validating:
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Certain Charter Amendment. Any amendment of our
charter to authorize, or increase the authorized amount of, any
shares of any class or series of stock ranking senior to the
Preferred Stock with respect to payment of dividends or
distribution of assets on our liquidation; as well as any
amendment of our charter or bylaws that would alter or change
the voting powers, preferences or special rights of the
Preferred Stock so as to affect them adversely; provided that
the amendment of the charter so as to authorize or create, or to
increase the authorized amount of any shares of any class or
series or any securities convertible into shares of any class or
series of our stock ranking on a parity with or junior to the
Preferred Stock with respect to dividends and in the
distribution of assets on our liquidation, dissolution or
winding-up
shall not be deemed to affect adversely the voting powers,
preferences or special rights of the Preferred Stock; or
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Certain Mergers and Consolidations. Any merger or
consolidation of us with or into any entity other than a
corporation (or comparable foreign entity), or any merger or
consolidation of us with or into any corporation (or comparable
foreign entity) unless (i) we are the surviving corporation
in such merger or consolidation and the Preferred Stock remains
outstanding or (ii) we are not the surviving entity in such
merger or consolidation but the Preferred Stock is not changed
in such merger or consolidation into anything other than a class
or series of
|
S-33
preferred stock of the surviving or resulting entity, or the
entity controlling such entity, having voting powers,
preferences and special rights that, if such change were
effected by amendment of our charter, would not require a vote
of the holders of the Preferred Stock under the preceding
paragraph.
So long as any shares of Preferred Stock are outstanding, in
addition to any other vote or consent of stockholders required
by our charter or the immediately preceding paragraph, the
holders of Preferred Stock shall be entitled to vote together
with the common stock as a single class with respect to any
merger of us into any entity that is, or consolidation of us
with another entity where the resulting entity is, not organized
and existing as a corporation under the laws of the United
States of America, any state thereof or the District of
Columbia, or any merger or consolidation of us with or
into any other entity if the Preferred Stock is converted or
exchanged in such merger or consolidation into a class or series
of preferred stock of a surviving or resulting entity, or its
ultimate parent, that is not organized and existing under the
laws of the United States of America, any state thereof or the
District of Columbia. Each share of Preferred Stock shall for
such purpose be entitled to a number of votes equal to the
number of shares of common stock into which a share of Preferred
Stock would be converted if the conversion date were the record
date for determining the shareholders entitled to vote on such
merger or consolidation.
The foregoing voting provisions will not apply if, at or prior
to the time when the act with respect to which the vote would
otherwise be required shall be effected, all outstanding shares
of Preferred Stock shall have been converted into shares of our
common stock.
Miscellaneous
We will at all times reserve and keep available out of the
authorized and unissued shares of our common stock, solely for
issuance upon the conversion of the Preferred Stock, that number
of shares of common stock as shall from time to time be issuable
upon the conversion of all the Preferred Stock then outstanding.
Any shares of the Preferred Stock converted into shares of our
common stock or otherwise reacquired by us shall resume the
status of authorized and unissued preferred shares, undesignated
as to series, and shall be available for subsequent issuance.
Transfer Agent,
Registrar, Paying Agent and Conversion Agent
Computershare Investor Services, Inc. will act as initial
transfer agent, registrar and paying agent for the payment of
dividends for the Preferred Stock and the conversion agent for
the conversion of the Preferred Stock.
Title
We and the transfer agent, registrar, paying agent and
conversion agent may treat the registered holder of the
Preferred Stock as the absolute owner of the Preferred Stock for
the purpose of making payment and settling the related
conversions and for all other purposes.
Replacement of
Preferred Stock Certificates
If physical certificates are issued, we will replace any
mutilated certificate at your expense upon surrender of that
certificate to the transfer agent. We will replace certificates
that become destroyed, stolen or lost at your expense upon
delivery to us and the transfer agent of satisfactory evidence
that the certificate has been destroyed, stolen or lost,
together with any indemnity that may be required by the transfer
agent and us.
However, we are not required to issue any certificates
representing the Preferred Stock on or after the applicable
conversion date. In place of the delivery of a replacement
certificate following the applicable conversion date, the
transfer agent, upon delivery of the evidence and indemnity
described above, will deliver the shares of common stock
pursuant to the terms of the Preferred Stock formerly evidenced
by the certificate.
S-34
DESCRIPTION OF
HUNTINGTON CAPITAL STOCK
Huntington is authorized to issue a total of
1,006,617,808 shares of all classes of stock. Of the total
number of authorized shares of stock, 1,000,000,000 shares
are common stock, par value $0.01 per share, and
6,617,808 shares are serial preferred stock, par value
$0.01 per share. A statement of the designations of the
authorized classes of preferred stock or of any series thereof,
and the powers, preferences and relative, participating,
optional or other special rights, and qualifications,
limitations or restrictions of that stock, or of the authority
of Huntingtons board of directors to authorize those
designations and other terms, is as follows.
The following description of the terms of our stock is only a
summary. For a complete description, we refer you to the
Maryland General Corporation Law, our charter and our bylaws.
Preferred
Stock
Shares of preferred stock may be issued from time to time in one
or more series. Huntingtons board of directors is
authorized, within the limitations and restrictions stated in
article fifth of Huntingtons charter to establish the
serial designations of the preferred stock and any such series
of preferred stock (a) may have such voting powers full or
limited, or may be without voting powers; (b) may be
subject to redemption at such time or times and at such prices;
(c) may be entitled to receive dividends (which may be
cumulative or noncumulative) at such rate or rates, on such
conditions, and at such times and payable in preference to, or
in such relation to, the dividends payable on any other class or
classes or series of stock; (d) may have such rights upon
the dissolution of, or upon any distribution of the assets of,
Huntington; (e) may be made convertible into, or
exchangeable for, shares of any other class or classes or of any
other series of the same or any other class or classes of stock
of Huntington, at such price or prices or at such rates of
exchange, and with such adjustments; and (f) shall have
such other preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends,
qualifications, terms or conditions of redemption or other
rights, all as are authorized by the board of directors and
stated and expressed in the articles supplementary or other
charter document providing for the issuance of such serial
preferred stock.
Prior to the issuance of the Preferred Stock, no class or series
of our preferred stock is outstanding.
Common
Stock
All shares of common stock issued upon conversion of the
Preferred Stock will be duly authorized, fully paid and
nonassessable. Holders of our common stock are entitled to
receive dividends when authorized by our board of directors and
declared by us out of assets legally available for the payment
of dividends. They are also entitled to share ratably in our
assets legally available for distribution to our stockholders in
the event of our liquidation, dissolution or winding up, after
payment of or adequate provision for all of our known debts and
liabilities. These rights are subject to the preferential rights
of any other class or series of our stock, including the
Preferred Stock.
Except as may otherwise be specified in the terms of any class
or series of common stock, each outstanding share of common
stock entitles the holder to one vote on all matters submitted
to a vote of stockholders, including the election of directors.
Except as provided with respect to any other class or series of
stock, the holders of our common stock will possess the
exclusive voting power. There is no cumulative voting in the
election of directors, which means that the holders of a
majority of the outstanding shares of common stock can elect all
of the directors then standing for election, and the holders of
the remaining shares will not be able to elect any directors.
Holders of our common stock have no preference, conversion,
exchange, sinking fund or redemption rights, have no preemptive
rights to subscribe for any of our securities and generally have
no appraisal rights except in certain limited transactions. All
shares of common stock will have equal dividend, liquidation and
other rights. Under Maryland law, our stockholders generally are
not liable for our debts or obligations.
S-35
Under Maryland law, a Maryland corporation generally cannot
dissolve, amend its charter, merge, sell all or substantially
all of its assets, engage in a share exchange or engage in
similar transactions outside the ordinary course of business,
unless declared advisable by the board of directors and approved
by the affirmative vote of stockholders holding at least
two-thirds of the shares entitled to vote on the matter.
However, a Maryland corporation may provide in its charter for
approval of these matters by a lesser percentage, but not less
than a majority of all of the votes entitled to be cast on the
matter. Our charter does not provide for a lesser percentage in
these situations.
The transfer agent and registrar for the common stock is
Computershare Investor Services, Inc.
BOOK-ENTRY
SYSTEM
The Depository Trust Company, which we refer to along with
its successors in this capacity as DTC, will
act as securities depositary for all of the Preferred Stock. We
will issue the Preferred Stock only as fully-registered
securities registered in the name of Cede & Co.,
DTCs nominee. We will issue and deposit with DTC one or
more fully-registered global certificates for the Preferred
Stock representing, in the aggregate, the total number of the
shares of Preferred Stock to be sold in the offering.
The laws of some jurisdictions may require that some purchasers
of securities take physical delivery of securities in definitive
form. These laws may impair the ability to transfer beneficial
interests in the Preferred Stock, so long as the corresponding
securities are represented by global security certificates.
In a few special situations described below, a global security
will be terminated and interest in it will be exchanged for
certificates in non-global form representing the securities it
represented. After that exchange, the choice of whether to hold
the securities directly or in street name will be up to the
investor. Investors must consult their own banks and brokers to
find out how to have their interests in global securities
transferred on termination to their own names, so that they will
be holders.
The special situations for termination of a global security
representing the Preferred Stock are as follows:
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if DTC is no longer willing or able to properly discharge its
responsibilities with respect to the Preferred Stock and we are
unable to locate a qualified successor; and
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we at our option elect to terminate the book-entry system
through DTC.
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If a global security is terminated, only DTC, and not we or the
depositary, is responsible for deciding the names of the
institutions in whose names the shares of Preferred Stock
represented by the global security will be registered and,
therefore, who will be the holders of those shares.
DTC has advised us that it is a limited purpose trust company
organized under the New York Banking Law, a banking organization
within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a clearing corporation
within the meaning of the New York Uniform Commercial Code and a
clearing agency registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds
securities that its direct participants deposit with DTC. DTC
also facilitates the post-trade settlement among participants of
sales and other securities transactions in deposited securities,
through electronic computerized book-entry transfers and pledges
between participants accounts. This eliminates the need
for physical movement of securities certificates. Direct
participants include both U.S. and
non-U.S. securities
brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTCs direct
participants include both U.S. and
non-U.S. securities
brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is a wholly
owned subsidiary of The Depository Trust & Clearing
Corporation, which, in turn, is owned by the users of its
regulated subsidiaries. Access to the DTC system is also
available to others, referred to as indirect
participants, such as both U.S. and
non-U.S. securities
brokers and dealers, banks, trust companies and clearing
corporations that clear through or maintain
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a direct or indirect custodial relationship with a direct
participant. The rules applicable to DTC and its participants
are on file with the SEC.
Purchases of shares of Preferred Stock within the DTC system
must be made by or through direct participants, who will receive
a credit for the Preferred Stock on DTCs records. The
ownership interest of each actual purchaser of each share of
Preferred Stock is in turn to be recorded on the direct and
indirect participants records. DTC will not send written
confirmation to beneficial owners of their purchases, but
beneficial owners are expected to receive written confirmations
providing details of the transaction, as well as periodic
statements of their holdings, from the direct or indirect
participant through which the beneficial owners purchased shares
of Preferred Stock. Transfers of ownership interests in shares
of Preferred Stock are to be accomplished by entries made on the
books of participants acting on behalf of beneficial owners.
Beneficial owners will not receive certificates representing
their ownership interests in shares of Preferred Stock, unless
the book-entry system for the Preferred Stock is discontinued.
DTC has no knowledge of the actual beneficial owners of the
shares of Preferred Stock. DTCs records reflect only the
identity of the direct participants to whose accounts the shares
of Preferred Stock are credited, which may or may not be the
beneficial owners. The participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants,
and by direct participants and indirect participants to
beneficial owners and the voting rights of direct and indirect
participants and beneficial owners, subject to any statutory or
regulatory requirements as are in effect from time to time, will
be governed by arrangements among them.
Although voting on the Preferred Stock is limited to the holders
of record of the Preferred Stock, in those instances in which a
vote is required, neither DTC nor Cede & Co. will
itself consent or vote on the Preferred Stock. Under its usual
procedures, DTC would mail an omnibus proxy to the depositary as
soon as possible after the record date. The omnibus proxy
assigns Cede & Co.s consenting or voting rights
to direct participants for whose accounts the shares of
Preferred Stock are credited on the record date (identified in a
listing attached to the omnibus proxy).
We will make dividend payments on the Preferred Stock to DTC.
DTCs practice is to credit direct participants
accounts on the relevant payment date in accordance with their
respective holdings shown on DTCs records unless DTC has
reason to believe that it will not receive payments on the
payment date. Standing instructions and customary practices will
govern payments from participants to beneficial owners. Subject
to any statutory or regulatory requirements, participants, and
neither DTC nor we, will be responsible for the payment. The
paying agent will be responsible for payment of dividends to
DTC. Direct and indirect participants are responsible for the
disbursement of the payments to the beneficial owners.
DTC may discontinue providing its services as securities
depositary on the Preferred Stock at any time by giving
reasonable notice to us. If a successor securities depositary is
not obtained, certificates for the shares of Preferred Stock
must be printed and delivered. We may at our option decide to
discontinue the use of the system of book-entry transfers
through DTC (or a successor depositary).
We have obtained the information in this section about DTC and
DTCs book-entry system from sources that we believe to be
accurate, but we assume no responsibility for the accuracy of
the information. We have no responsibility for the performance
by DTC or its participants of their respective obligations as
described in this prospectus supplement or under the rules and
procedures governing their respective operations.
Beneficial owner refers to the ownership
interest of each actual purchaser of each share of Preferred
Stock.
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CERTAIN ERISA
CONSIDERATIONS
The following is a summary of certain considerations associated
with the purchase of the shares of the Preferred Stock by
employee benefit plans to which (i) Title I of the
U.S. Employee Retirement Income Security Act of 1974, as
amended, which we refer to as ERISA, applies, (ii) plans,
individual retirement accounts and other arrangements to which
Section 4975 of the Code or provisions under any federal,
state, local,
non-U.S. or
other laws or regulations that are similar to such provisions of
ERISA or the Internal Revenue Code of 1986, as amended, which we
refer to as the Code, which we collectively refer to as Similar
Laws, applies, and (iii) entities whose underlying assets
are considered to include plan assets of such plans,
accounts and arrangements, (each of which we call a Plan).
Each fiduciary of a Plan should consider the fiduciary standards
of ERISA or any applicable Similar Laws in the context of the
Plans particular circumstances before authorizing an
investment in the shares of the Preferred Stock. Accordingly,
among other factors, the fiduciary should consider whether the
investment would satisfy the prudence and diversification
requirements of ERISA or any applicable Similar Laws and would
be consistent with the documents and instruments governing the
Plan.
Section 406 of ERISA and Section 4975 of the Code
prohibit Plans subject to such provisions, which we call ERISA
Plans, from engaging in certain transactions involving
plan assets with persons that are parties in
interest under ERISA or disqualified persons
under the Code with respect to the ERISA Plans. A violation of
these prohibited transaction rules may result in an
excise tax or other liabilities under ERISA
and/or
Section 4975 of the Code for those persons, unless
exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA),
certain church plans (as defined in Section 3(33) of ERISA)
and
non-U.S. plans
(as described in Section 4(b)(4) of ERISA) are not subject
to the requirements of ERISA or Section 4975 of the Code,
but may be subject to Similar Laws.
Prohibited transactions within the meaning of Section 406
of ERISA or Section 4975 of the Code could arise if the
shares of the Preferred Stock were acquired by an ERISA Plan
with respect to which we or any of our affiliates are a party in
interest or a disqualified person. For example, if we are a
party in interest or disqualified person with respect to an
investing ERISA Plan (either directly or by reason of our
ownership of our subsidiaries), an extension of credit
prohibited by Section 406(a)(1)(B) of ERISA and
Section 4975(c)(1)(B) of the Code between the investing
ERISA Plan and us may be deemed to occur, unless exemptive
relief were available under an applicable exemption (see below).
The U.S. Department of Labor has issued prohibited
transaction class exemptions, or PTCEs, that may provide
exemptive relief for direct or indirect prohibited transactions
resulting from the purchase, holding or disposition of the
shares of the Preferred Stock. Those class exemptions include:
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PTCE 96-23
for certain transactions determined by in-house asset managers;
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PTCE 95-60
for certain transactions involving insurance company general
accounts;
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PTCE 91-38
for certain transactions involving bank collective investment
funds;
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PTCE 90-1 for
certain transactions involving insurance company separate
accounts; and
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PTCE 84-14
for certain transactions determined by independent qualified
professional asset managers.
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In addition, ERISA Section 408(b)(17) provides a limited
exemption for the purchase and sale of securities and related
lending transactions, provided that neither the issuer of the
securities nor any of its affiliates have or exercise any
discretionary authority or control or render any investment
advice with respect to the assets of any Plan involved in the
transaction and provided further that the Plan pays no more than
adequate consideration in connection with the transaction (the
so-called service provider exemption).
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No assurance can be made that all of the conditions of any such
exemptions will be satisfied.
Because of the possibility that direct or indirect prohibited
transactions or violations of Similar Laws could occur as a
result of the purchase, holding or disposition of the shares of
the Preferred Stock by a Plan, the shares of the Preferred Stock
may not be purchased by any Plan, or any person investing the
assets of any Plan, unless its purchase, holding and disposition
of the shares of the Preferred Stock will not constitute or
result in a non-exempt prohibited transaction under ERISA or the
Code or a violation of any Similar Laws. Any purchaser or holder
of the shares of Preferred Stock or any interest in the shares
of the Preferred Stock will be deemed to have represented by its
purchase and holding of the shares of the Preferred Stock that
either:
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it is not a Plan and is not purchasing the shares of the
Preferred Stock or interest in the shares of the Preferred Stock
on behalf of or with the assets of any Plan; or
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its purchase, holding and disposition of the shares of the
Preferred Stock or interest in the shares of the Preferred Stock
will not constitute or result in a non-exempt prohibited
transaction under ERISA or the Code or a violation of any
Similar Laws.
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Due to the complexity of these rules and the penalties imposed
upon persons involved in non-exempt prohibited transactions, it
is important that any person considering the purchase of shares
of the Preferred Stock on behalf of or with the assets of any
Plan consult with its counsel regarding the consequences under
ERISA, the Code and any applicable Similar Laws of the
acquisition, ownership and disposition of shares of the
Preferred Stock, whether any exemption would be applicable, and
whether all conditions of such exemption have been satisfied
such that the acquisition and holding of the shares of the
Preferred Stock by the Plan are entitled to full exemptive
relief thereunder.
Nothing herein shall be construed as, and the sale of shares of
the Preferred Stock to a Plan is in no respect, a representation
by us or the underwriters that any investment in the shares of
the Preferred Stock would meet any or all of the relevant legal
requirements with respect to investment by, or is appropriate
for, Plans generally or any particular Plan.
S-39
CERTAIN U.S.
FEDERAL INCOME TAX CONSIDERATIONS
In this section, we summarize certain material U.S. federal
income tax considerations relating to the purchase, beneficial
ownership, conversion and disposition of the Preferred Stock and
the ownership and disposition of our common stock received in
respect thereof. This summary deals only with Preferred Stock
and our common stock held as capital assets (as defined in the
Code).
We do not address all of the tax consequences that may be
relevant to you in light of your particular circumstances or to
you if you are a holder subject to special rules, such as a
bank, thrift institution, real estate investment trust, personal
holding company, insurance company or a broker, trader or dealer
in securities or currencies. Further, we do not address:
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the U.S. federal income tax consequences to you if you are
a tax exempt organization that holds the Preferred Stock or our
common stock;
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the U.S. federal estate, gift or alternative minimum tax
consequences to you of the purchase, beneficial ownership,
conversion or disposition of the Preferred Stock or our common
stock;
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the U.S. federal income tax consequences to you if you hold
the Preferred Stock or our common stock in a
straddle or as part of a hedging,
conversion or constructive sale
transaction or if your functional currency is not
the U.S. dollar; or
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any state, local or foreign tax consequences to you of the
purchase, beneficial ownership, conversion or disposition of the
Preferred Stock or our common stock.
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This summary is based on the Code, U.S. Treasury
regulations (proposed, temporary and final) issued thereunder
and administrative and judicial interpretations thereof, all as
they currently exist as of the date of this prospectus
supplement and all of which are subject to change, possibly with
retroactive effect, so as to result in U.S. federal income
tax consequences different from those discussed below.
You are a U.S. Holder if you are a
beneficial owner of the Preferred Stock or our common stock that
is for U.S. federal income tax purposes:
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an individual citizen or resident of the United States;
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a corporation (or other entity taxable as a corporation) created
or organized in or under the laws of the United States, any
state thereof or the District of Columbia;
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an estate if its income is subject to U.S. federal income
taxation regardless of its source; or
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a trust if (i) a U.S. court can exercise primary
supervision over its administration and one or more
U.S. persons have the authority to control all of its
substantial decisions or (ii) the trust has a valid
election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person.
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You are a
Non-U.S. Holder
if you are a beneficial owner of the Preferred Stock or our
common stock that is not a U.S. Holder or a partnership (or
other entity treated as a partnership for U.S. federal
income tax purposes).
If a partnership (or other entity treated as a partnership for
U.S. federal income tax purposes) holds the Preferred Stock
or our common stock, the U.S. federal income tax treatment
of the partnership and its partners generally will depend on the
status of the partner and the activities of the partnership and
its partners. If you are a partner in a partnership holding the
Preferred Stock or our common stock, you should consult your tax
advisor with regard to the U.S. federal income tax
treatment of an investment in the Preferred Stock or our common
stock.
S-40
U.S.
Holders
Dividends. Any distribution with respect to the
Preferred Stock or our common stock that we pay out of our
current or accumulated earnings and profits, as determined for
U.S. federal income tax purposes, will constitute a
dividend and will be includible in gross income by you when paid.
Any such dividend will be eligible for the dividends-received
deduction if you are a qualifying corporate U.S. Holder
that meets the holding period and other requirements for the
dividends-received deduction. In addition, if you are a
corporate U.S. Holder, you may be required to reduce your
basis in your interest in the Preferred Stock or our common
stock with respect to certain extraordinary
dividends, as provided under Section 1059 of the
Code. You should consult your own tax advisor concerning the
application of these rules in light of your particular
circumstances.
In addition, any such dividend will be considered a
qualified dividend provided that certain minimum
holding period requirements are satisfied. Qualified dividend
income received in taxable years beginning before
January 1, 2011 by certain non-corporate U.S. Holders,
including individuals, generally will be subject to reduced
rates of taxation.
Distributions with respect to the Preferred Stock or our common
stock in excess of our current or accumulated earnings and
profits would be treated first as a non-taxable return of
capital to the extent of your basis in the Preferred Stock or
our common stock, and thereafter as capital gain.
Sale, Exchange or Other Disposition. Upon a sale,
exchange or other disposition of the Preferred Stock or our
common stock, you generally will recognize capital gain or loss
equal to the difference between the amount realized (not
including any amount attributable to declared and unpaid
dividends, which will be taxable as described above to
U.S. Holders of record who have not previously included
such dividends in income) and your adjusted tax basis in the
Preferred Stock or our common stock. Your adjusted tax basis in
the Preferred Stock or our common stock at the time of any such
disposition generally should equal your initial tax basis in the
Preferred Stock or our common stock at the time of purchase,
reduced by the amount of any cash distributions treated as a
return of capital as described above. Such capital gain or loss
generally will be long-term capital gain or loss if you have
held the Preferred Stock or our common stock for more than one
year at the time of disposition. Long-term capital gains
recognized by certain non corporate U.S. Holders, including
individuals, generally are subject to reduced rates of taxation.
The deductibility of capital losses is subject to limitations.
Conversion of the Preferred Stock into Our Common
Stock. You generally will not recognize any gain or loss
in respect of the receipt of our common stock upon the
conversion of the Preferred Stock. The adjusted tax basis of our
common stock that you receive on conversion will equal the
adjusted tax basis of the Preferred Stock converted (reduced by
the portion of adjusted tax basis allocated to any fractional
common share exchanged for cash, as described below), and the
holding period of such common stock received on conversion will
generally include the period during which you held the Preferred
Stock prior to conversion.
Cash received in lieu of a fractional common share will
generally be treated as a payment in a taxable exchange for such
fractional common share, and capital gain or loss will be
recognized on the receipt of cash in an amount equal to the
difference between the amount of cash received and the amount of
adjusted tax basis allocable to the fractional common share. Any
cash received attributable to any declared and unpaid dividends
on the Preferred Stock will be treated as described above under
U.S. Holders Dividends.
Adjustment of the Conversion Rate. The conversion
rate of the Preferred Stock is subject to adjustment under
certain circumstances. U.S. Treasury regulations
promulgated under Section 305 of the Code would treat a
U.S. Holder of the Preferred Stock as having received a
constructive distribution includable in such
U.S. Holders income in the manner as described above
under U.S. Holders Dividends,
above, if and to the extent that certain adjustments in the
conversion rate increase the proportionate interest of a
U.S. Holder in our earnings and profits. For example, an
increase in the conversion rate to reflect a taxable dividend to
holders of our common stock or in
S-41
connection with certain acquisitions (see Description of
Preferred Stock Conversion upon Certain
Acquisitions) will generally give rise to a deemed taxable
dividend to the holders of the Preferred Stock to the extent of
our current and accumulated earnings and profits. In addition,
an adjustment to the conversion rate of the Preferred Stock or a
failure to make such an adjustment could potentially give rise
to constructive distributions to U.S. Holders of our common
stock. Thus, under certain circumstances, U.S. Holders may
recognize income in the event of a constructive distribution
even though they may not receive any cash or property.
Adjustments to the conversion rate made pursuant to a bona fide
reasonable adjustment formula which has the effect of preventing
dilution in the interest of the U.S. Holders of the
Preferred Stock, however, will generally not be considered to
result in a constructive dividend distribution.
Backup Withholding and Information Reporting. In
general, you may be subject to backup withholding, currently at
a rate of 28%, and information reporting with respect to
distributions with respect to the Preferred Stock or our common
stock and the proceeds received from the disposition of the
Preferred Stock or our common stock, unless you are an entity
exempt from backup withholding, such as a corporation or a
tax-exempt entity, and, when required, demonstrate this fact. If
you are not exempt, you may be subject to backup withholding and
information reporting unless you provide your Taxpayer
Identification Number, or TIN, which, if you
are an individual, is your Social Security Number; you certify,
under penalties of perjury, that (i) the TIN you provide is
correct, (ii) you are a U.S. person and (iii) you
are not subject to backup withholding because (a) you are
exempt from backup withholding, (b) you have not been
notified by the IRS that you are subject to backup withholding
due to underreporting of interest or dividends or (c) you
have been notified by the IRS that you are no longer subject to
backup withholding; and you otherwise comply with the applicable
requirements of the backup withholding rules.
Backup withholding is not an additional tax. The amount of any
backup withholding from a payment to you will be allowed as a
credit against your U.S. federal income tax and may entitle
you to a refund, provided that you furnish the required
information to the IRS in a timely manner.
Non-U.S.
Holders
Dividends. In general, dividends (including any
constructive distributions taxable as dividends) with respect to
the Preferred Stock or our common stock will be subject to
U.S. federal withholding tax at a 30% rate, unless such
rate is reduced by an applicable tax treaty. Dividends that are
effectively connected with your conduct of a trade or business
in the United States and, in the case of an applicable tax
treaty, are attributable to your permanent establishment in the
United States, are not subject to the withholding tax, but
instead are subject to U.S. federal income tax on a net
income basis at applicable individual or corporate rates. You
will be required to comply with certain certification and
disclosure requirements in order for effectively connected
income to be exempt from withholding or to claim a reduced
treaty rate. Any such effectively connected dividends received
by you if you are a corporation may also, under certain
circumstances, be subject to the branch profits tax at a 30%
rate or such lower rate as may be prescribed under an applicable
tax treaty.
Sale, Exchange or Other Disposition. Any gain that
you realize upon a sale, exchange or other disposition of the
Preferred Stock or our common stock (including, in the case of
conversion, the deemed exchange that gives rise to a payment of
cash in lieu of a fractional common share) generally will not be
subject to U.S. federal income or withholding tax unless:
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the gain is effectively connected with your conduct of a trade
or business in the United States and, in the case of an
applicable tax treaty, is attributable to your permanent
establishment in the United States;
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you are an individual who is present in the United States for
183 days or more in the taxable year of disposition and
certain conditions are met; or
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S-42
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we are or have been a U.S. real property holding
corporation for U.S. federal income tax purposes at any
time during the shorter of the five-year period ending on the
date of disposition or the period that you held the Preferred
Stock or our common stock. However, we do not believe that we
are currently, and do not anticipate becoming, a U.S. real
property holding corporation.
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If your gain is described in the first bullet point above, you
generally will be subject to U.S. federal income tax on the
net gain derived from the sale. If you are a corporation, then
any such effectively connected gain may also, under certain
circumstances, be subject to the branch profits tax at a 30%
rate, or such lower rate as may be prescribed under an
applicable tax treaty. If you are an individual described in the
second bullet point above, you will be subject to a flat 30%
U.S. federal tax on the gain derived from the sale, which
may be offset by
U.S.-source
capital losses, even though you are not considered a resident of
the United States.
Conversion of the Preferred Stock into Our Common
Stock. You generally will not recognize any gain or loss
in respect of the receipt of our common stock upon the
conversion of the Preferred Stock, except with respect to any
cash received in lieu of a fractional share that is taxable as
described above under
Non-U.S. Holders
Sale, Exchange or Other Disposition.
Adjustment of the Conversion Rate. As described
above under U.S. Holders Adjustment of
the Conversion Rate, adjustments in the conversion rate
(or failures to adjust the conversion rate) that increase the
proportionate interest of a
Non-U.S. Holder
in our earnings and profits could result in deemed distributions
to the
Non-U.S. Holder
that are taxed as described under
Non-U.S. Holders
Dividends. Any constructive dividend deemed paid to you
will be subject to U.S. federal withholding tax at a 30%
rate, unless such rate is reduced by an applicable tax treaty.
It is possible that U.S. federal tax on the constructive
dividend would be withheld from subsequent payments on the
Preferred Stock or our common stock. If you are subject to
withholding tax under such circumstances, you should consult
your own tax advisor as to whether you can obtain a refund for
all or a portion of the withholding tax.
Backup Withholding and Information Reporting. In
general, you will not be subject to backup withholding with
respect to payments that we make to you, provided that we do not
have actual knowledge or reason to know that you are a
U.S. person and you have given us an appropriate statement
certifying, under penalties of perjury, that you are not a
U.S. person. In addition, you will not be subject to backup
withholding with respect to the proceeds of the sale of the
Preferred Stock or our common stock within the United States or
conducted through certain
U.S.-related
financial intermediaries, if the payor receives the statement
described above and does not have actual knowledge or reason to
know that you are a U.S. person or you otherwise establish
an exemption. However, we may be required to report annually to
the IRS and to you the amount of, and the tax withheld with
respect to, any dividends paid to you, regardless of whether any
tax was actually withheld. Copies of these information returns
may also be made available under the provisions of a specific
treaty or agreement to the tax authorities of the country in
which you reside.
S-43
UNDERWRITING
Morgan Stanley & Co. Incorporated and Lehman Brothers
Inc. are acting as the representatives of the underwriters and
as the joint book-running managers of this offering. Under the
terms of an underwriting agreement, each of the underwriters
named below has severally agreed to purchase from us the
respective number of shares of Preferred Stock shown opposite
its name below:
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Underwriters
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Number of Shares
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Morgan Stanley & Co. Incorporated
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257,500
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Lehman Brothers Inc.
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207,500
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Wachovia Capital Markets, LLC
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16,650
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The Huntington Investment Company
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10,000
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SunTrust Robinson Humphrey, Inc.
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8,350
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Total
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500,000
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The underwriting agreement provides that the underwriters
obligation to purchase shares of Preferred Stock depends on the
satisfaction of the conditions contained in the underwriting
agreement including:
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the obligation to purchase all of the shares of Preferred Stock
(other than those shares of Preferred Stock covered by their
option to purchase additional shares as described below) offered
hereby if any of the shares are purchased;
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the representations and warranties made by us to the
underwriters are true;
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there is no material change in our business or in the financial
markets; and
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we deliver customary closing documents to the underwriters.
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Commissions and
Expenses
The following table summarizes the underwriting discounts and
commissions we will pay to the underwriters. These amounts are
shown assuming both no exercise and full exercise of the
underwriters option to purchase additional shares of
Preferred Stock. The underwriting fee is the difference between
the initial price to the public and the amount the underwriters
pay to us for the shares.
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No Exercise
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Full Exercise
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Per share
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$
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30
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$
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30
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Total
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$
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15,000,000
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$
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17,250,000
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The representatives of the underwriters have advised us that the
underwriters propose to offer the shares of Preferred Stock
directly to the public at the public offering price on the cover
of this prospectus supplement and to selected dealers, which may
include the underwriters, at such offering price less a selling
concession not in excess of $18 per share. After the offering,
the representatives may change the offering price and other
selling terms.
The expenses of the offering that are payable by us are
estimated to be approximately $2.5 million (excluding
underwriting discounts and commissions).
Option to
Purchase Additional Shares
We have granted the underwriters an option exercisable for
30 days after the date of this prospectus supplement, to
purchase, from time to time, in whole or in part, up to an
aggregate of 75,000 shares of Preferred Stock at the public
offering price less underwriting discounts and commissions. This
option may be exercised if the underwriters sell more than
shares in connection with this offering. To the extent that this
option is exercised, each underwriter will be obligated, subject
to certain conditions, to purchase its pro rata portion
of these additional shares based on the
S-44
underwriters percentage underwriting commitment in the
offering as indicated in the table at the beginning of this
section.
Lock-Up
Agreements
All of our directors and executive officers have agreed that,
subject to certain exceptions, through and including the date
90 days after the date hereof, they will not directly or
indirectly offer, sell, contract to sell, pledge, grant any
option to purchase, make any short sale or otherwise dispose of
any shares of our common stock, or any options or warrants to
purchase any shares of our common stock, or any securities
convertible into, exchangeable for or that represent the right
to receive shares of our common stock, whether now owned or
hereinafter acquired, owned directly by the undersigned
(including holding as a custodian) or with respect to which such
person has beneficial ownership within the rules and regulations
of the SEC (collectively the covered shares).
The foregoing restriction is expressly agreed to preclude them
from engaging in any hedging or other transaction which is
designed to or which reasonably could be expected to lead to or
result in a sale or disposition of the covered shares even if
such shares would be disposed of by someone other than them.
Such prohibited hedging or other transactions would include
without limitation any short sale or any purchase, sale or grant
of any right (including without limitation any put or call
option) with respect to any of the covered shares or with
respect to any security that includes, relates to, or derives
any significant part of its value from such shares.
We have agreed, through and including the date 90 days
after the date hereof, not to offer, sell, contract to sell,
pledge, grant any option to purchase, make any short sale or
otherwise dispose of, except as provided hereunder, any shares
of Preferred Stock or our common stock or any security of ours
that is substantially similar to the Preferred Stock or our
common stock, any options or warrants to purchase any shares of
Preferred Stock or our common stock, or any securities that are
convertible into or exchangeable for or that represent the right
to receive any shares of Preferred Stock or our common stock or
any security of ours that is substantially similar to the
Preferred Stock or our common stock or file a registration
statement with respect to any of the foregoing other than
(1) the offer and sale of Preferred Stock pursuant to this
prospectus supplement, (2) the grant of stock options or
other equity awards pursuant to our existing employee benefit,
employee stock purchase or dividend reinvestment plans,
(3) the issuance of our common stock pursuant to the
exercise of such options or settlement of such equity awards, or
(4) upon the consent of Morgan Stanley & Co.
Incorporated and Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated and Lehman Brothers
Inc., in their sole discretion, may release our common stock or
the Preferred Stock and other securities subject to the
lock-up
agreements described above in whole or in part at any time with
or without notice. When determining whether or not to release
common stock or Preferred Stock and other securities from
lock-up
agreements, Morgan Stanley & Co. Incorporated and
Lehman Brothers Inc. will consider, among other factors, the
holders reasons for requesting the release, the number of
shares of common stock or Preferred Stock and other securities
for which the release is being requested and market conditions
at the time.
Indemnification
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act, and
to contribute to payments that the underwriters may be required
to make for these liabilities.
Stabilization,
Short Positions and Penalty Bids
The representatives may engage in stabilizing transactions,
short sales and purchases to cover positions created by short
sales, and penalty bids or purchases for the purpose of pegging,
fixing or
S-45
maintaining the price of the Preferred Stock, in accordance with
Regulation M under the Exchange Act:
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Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a
specified maximum.
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A short position involves a sale by the underwriters of shares
in excess of the number of shares the underwriters are obligated
to purchase in the offering, which creates the syndicate short
position. The underwriters may close out any short position by
purchasing shares in the open market. A syndicate short position
is more likely to be created if the underwriters are concerned
that there could be downward pressure on the price of the shares
in the open market after pricing that could adversely affect
investors who purchase in the offering.
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Syndicate covering transactions involve purchases of the
Preferred Stock in the open market after the distribution has
been completed in order to cover syndicate short positions.
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Penalty bids permit the representatives to reclaim a selling
concession from a syndicate member when the Preferred Stock
originally sold by the syndicate member is purchased in a
stabilizing or syndicate covering transaction to cover syndicate
short positions.
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These stabilizing transactions, syndicate covering transactions
and penalty bids may have the effect of raising or maintaining
the market price of our Preferred Stock or preventing or
retarding a decline in the market price of the Preferred Stock.
As a result, the price of the Preferred Stock may be higher than
the price that might otherwise exist in the open market. These
transactions, if commenced, may be discontinued at any time.
Neither we nor any of the underwriters make any representation
or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of
the Preferred Stock. In addition, neither we nor any of the
underwriters make representation that the representatives will
engage in these stabilizing transactions or that any
transaction, once commenced, will not be discontinued without
notice.
Passive Market
Making
In connection with the offering, underwriters and selling group
members may engage in passive market making transactions in the
common stock on the NASDAQ Global Select Market in accordance
with Rule 103 of Regulation M under the Securities
Exchange Act of 1934 during the period before the commencement
of offers or sales of common stock and extending through the
completion of distribution. A passive market maker must display
its bids at a price not in excess of the highest independent bid
of the security. However, if all independent bids are lowered
below the passive market makers bid that bid must be
lowered when specified purchase limits are exceeded.
Electronic
Distribution
A prospectus in electronic format may be made available on the
Internet sites or through other online services maintained by
one or more of the underwriters
and/or
selling group members participating in this offering, or by
their affiliates. In those cases, prospective investors may view
offering terms online and, depending upon the particular
underwriter or selling group member, prospective investors may
be allowed to place orders online. The underwriters may agree
with us to allocate a specific number of shares for sale to
online brokerage account holders. Any such allocation for online
distributions will be made by the representatives on the same
basis as other allocations.
Other than the prospectus in electronic format, the information
on any underwriters or selling group members web
site and any information contained in any other web site
maintained by an underwriter or selling group member is not part
of the prospectus or the registration statement of which this
prospectus supplement and the accompanying prospectus form a
part, has not been
S-46
approved
and/or
endorsed by us or any underwriter or selling group member in its
capacity as underwriter or selling group member and should not
be relied upon by investors.
No
Listing
There is no public market for the Preferred Stock. The Preferred
Stock may be listed on the NASDAQ Global Select Market. There
can be no assurance, however, that a listing will be obtained or
that an active trading market will develop, or if developed,
that an active trading market will be maintained. The
underwriters have advised us that they intend to facilitate
secondary market trading by making a market in the Preferred
Stock. However, the underwriters are not obligated to make a
market in the Preferred Stock and may discontinue market making
activities at any time. If an active market is not developed or
sustained, the market price and liquidity of the Preferred Stock
may be adversely affected.
Stamp
Taxes
If you purchase shares of Preferred Stock offered in this
prospectus supplement and the accompanying prospectus, you may
be required to pay stamp taxes and other charges under the laws
and practices of the country of purchase, in addition to the
offering price listed on the cover page of this prospectus
supplement and the accompanying prospectus.
Relationships
Certain of the underwriters and their related entities have
engaged and may engage in commercial and investment banking
transactions, financial advisory and other transactions with us
in the ordinary course of their business. They have received
customary compensation and expenses for these commercial and
investment banking transactions. Among other things, the
underwriters may purchase, as principals, loans originated or
sold by us.
The Huntington Investment Company is an affiliate of Huntington
and is acting as a
co-manager
in this offering of the Preferred Stock. Accordingly, the
offering of the Preferred Stock will conform to the requirements
set forth in NASD Conduct Rule 2720. The underwriters will
not confirm any sales of the Preferred Stock to discretionary
accounts without the specific written consent of the customer.
Notice to
Prospective Investors in the European Economic Area
In relation to each member state of the European Economic Area
that has implemented the Prospectus Directive (each, a relevant
member state), with effect from and including the date on which
the Prospectus Directive is implemented in that relevant member
state (the relevant implementation date), an offer of Preferred
Stock described in this prospectus supplement may not be made to
the public in that relevant member state prior to the
publication of a prospectus in relation to the Preferred Stock
that has been approved by the competent authority in that
relevant member state or, where appropriate, approved in another
relevant member state and notified to the competent authority in
that relevant member state, all in accordance with the
Prospectus Directive, except that, with effect from and
including the relevant implementation date, an offer of
securities may be offered to the public in that relevant member
state at any time:
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to any legal entity that is authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities or
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to any legal entity that has two or more of (1) an average
of at least 250 employees during the last financial year;
(2) a total balance sheet of more than 43,000,000 and
(3) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts or
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to fewer than 100 natural or legal persons (other than qualified
investors as defined in the Prospectus Directive) subject to
obtaining the prior consent of the representatives for any such
offer; or
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S-47
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in any other circumstances that do not require the publication
of a prospectus pursuant to Article 3 of the Prospectus
Directive.
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Each purchaser of Preferred Stock described in this prospectus
supplement located within a relevant member state will be deemed
to have represented, acknowledged and agreed that it is a
qualified investor within the meaning of
Article 2(1)(e) of the Prospectus Directive.
For purposes of this provision, the expression an offer
to the public in any relevant member state means the
communication in any form and by any means of sufficient
information on the terms of the offer and the securities to be
offered so as to enable an investor to decide to purchase or
subscribe the securities, as the expression may be varied in
that member state by any measure implementing the Prospectus
Directive in that member state, and the expression
Prospectus Directive means Directive
2003/71/EC
and includes any relevant implementing measure in each relevant
member state.
We have not authorized and do not authorize the making of any
offer of Preferred Stock through any financial intermediary on
our behalf, other than offers made by the underwriters with a
view to the final placement of the Preferred Stock as
contemplated in this prospectus supplement. Accordingly, no
purchasers of the Preferred Stock, other than the underwriters,
are authorized to make any further offer of the Preferred Stock
on behalf of us or the underwriters.
Notice to
Prospective Investors in the United Kingdom
This prospectus supplement is only being distributed to, and is
only directed at, persons in the United Kingdom that are
qualified investors within the meaning of Article 2(1)(e)
of the Prospectus Directive (Qualified
Investors) that are also (i) investment
professionals falling within Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005
(the Order) or (ii) high net worth
entities, and other persons to whom it may lawfully be
communicated, falling within Article 49(2)(a) to
(d) of the Order (all such persons together being referred
to as relevant persons). This prospectus
supplement and its contents are confidential and should not be
distributed, published or reproduced (in whole or in part) or
disclosed by recipients to any other persons in the United
Kingdom. Any person in the United Kingdom that is not a relevant
person should not act or rely on this document or any of its
contents.
S-48
VALIDITY OF
SECURITIES
The validity of the Preferred Stock will be passed upon for us
by Venable LLP, Baltimore, Maryland. Additionally, certain legal
matters relating to the offering will be passed upon for us by
Wachtell, Lipton, Rosen & Katz, New York, New York and
by Shearman & Sterling LLP, New York, New York and for
the underwriters by Sullivan & Cromwell LLP, New York,
New York.
S-49
PROSPECTUS
Huntington
Bancshares Incorporated
Common
Stock
Preferred Stock
Depositary Shares
Debt Securities
Junior Subordinated Debt Securities
Warrants
Guarantees
Stock Purchase Contracts for Preferred Stock
Huntington
Capital III
Trust Preferred
Securities
Huntington
Capital IV
Huntington Capital V
Huntington Capital VI
Trust Preferred
Securities
Normal Securities
Stripped Securities
Capital Securities
Huntington
Center
41 South High Street
Columbus, Ohio 43287
614-480-8300
The securities listed above may be offered and sold, from time
to time, by us, the Trusts
and/or one
or more selling securityholders to be identified in the future
in amounts, at prices, and on other terms to be determined at
the time of the offering. This prospectus describes the general
terms of these securities and the general manner in which we
will offer these securities. We will describe the specific terms
and manner of offering of these securities in a supplement to
this prospectus. The prospectus supplement may also add, update,
or change information contained in this prospectus. You should
read this prospectus and any prospectus supplement carefully
before you invest. The expression Trusts refers to
Huntington Capital III, Huntington Capital IV, Huntington
Capital V and Huntington Capital VI, each of which is a
statutory trust formed under the laws of the State of Delaware.
Our common stock is listed and traded on the Nasdaq Global
Select Market under the symbol HBAN.
These securities are our unsecured obligations and are not
savings accounts, deposits, or other obligations of any of our
bank or nonbank subsidiaries and are not insured by the Federal
Deposit Insurance Corporation or any other governmental
agency.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
This prospectus is dated March 25, 2008.
ABOUT THIS
PROSPECTUS
This prospectus is part of a registration statement that we and
the Trusts filed with the Securities and Exchange Commission
(SEC) using a shelf registration or
continuous offering process. Under this shelf process, we may
from time to time sell any combination of the securities
described in this prospectus in one or more offerings.
We may offer the following securities from time to time:
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common stock;
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preferred stock;
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depositary shares;
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debt securities;
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junior subordinated debt securities;
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warrants;
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guarantees; or
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stock purchase contracts for preferred stock.
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The Trusts may sell trust preferred securities, normal
securities, stripped securities and capital securities
representing undivided beneficial interests in all or certain
assets of the Trusts, which may be guaranteed by Huntington
Bancshares Inc.
Each time we sell securities we will provide a prospectus
supplement containing specific information about the terms of
the securities being offered. That prospectus supplement may
include a discussion of any risk factors or other special
considerations that apply to those securities. The prospectus
supplement may also add, update, or change the information in
this prospectus. If there is any inconsistency between the
information in this prospectus and any prospectus supplement,
you should rely on the information in that prospectus
supplement. You should read both this prospectus and any
prospectus supplement together with additional information
described under the heading Where You Can Find More
Information.
The registration statement containing this prospectus, including
exhibits to the registration statement, provides additional
information about us and the securities offered under this
prospectus. The registration statement can be read at the SEC
web site or at the SEC offices mentioned under the heading
Where You Can Find More Information.
You should rely only on the information we incorporate by
reference or present in this prospectus or the relevant
prospectus supplement. We have not authorized anyone else,
including any underwriter or agent, to provide you with
different or additional information. We may only use this
prospectus to sell securities if it is accompanied by a
prospectus supplement which includes the specific terms of that
offering. We are only offering these securities in states where
the offer is permitted. You should not assume that the
information in this prospectus or the applicable prospectus
supplement is accurate as of any date other than the dates on
the front of those documents.
We may sell securities to underwriters who will sell the
securities to the public on terms fixed at the time of sale. In
addition, the securities may be sold by us directly or through
dealers or agents designated from time to time. If we, directly
or through agents, solicit offers to purchase the securities, we
reserve the sole right to accept and, together with our agents,
to reject, in whole or in part, any of those offers.
The prospectus supplement will contain the names of the
underwriters, dealers, or agents, if any, together with the
terms of offering, the compensation of those underwriters,
dealers, or agents, and the net proceeds to us. Any
underwriters, dealers, or agents participating in the offering
may be deemed underwriters within the meaning of the
Securities Act of 1933.
One or more of our subsidiaries, including The Huntington
Investment Company, may buy and sell any of the securities after
the securities are issued as part of their business as a
broker-dealer. Those subsidiaries may use this prospectus and
the related prospectus supplement in those transactions. Any
sale by a subsidiary will be made at the prevailing market price
at the time of sale.
1
When we refer to we, our, and
us in this prospectus, we mean Huntington Bancshares
Incorporated and our consolidated subsidiaries, unless the
context indicates that we refer only to the parent company,
Huntington Bancshares Incorporated. References to the
Trusts are to Huntington Capital III, Huntington
Capital IV, Huntington Capital V and Huntington Capital VI,
statutory Delaware trusts and the issuers of securities and
guarantees to which this prospectus relates.
2
WHERE YOU CAN
FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy
statements, and other information with the Securities and
Exchange Commission. Our SEC filings are available to the public
over the Internet at the SECs web site at
http://www.sec.gov
and on the investor relations page of our website at
http://www.huntington.com.
Except for those SEC filings incorporated by reference in this
prospectus, none of the other information on our website is part
of this prospectus. You may also read and copy any document we
file with the SEC at its public reference facilities at
100 F Street N.E., Washington, D.C. 20549. You
can also obtain copies of the documents upon the payment of a
duplicating fee to the SEC. Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
facilities.
This prospectus omits some information contained in the
registration statement in accordance with SEC rules and
regulations. You should review the information and exhibits
included in the registration statement for further information
about us and the securities we and the Trusts are offering.
Statements in this prospectus concerning any document we filed
as an exhibit to the registration statement or that we otherwise
filed with the SEC are not intended to be comprehensive and are
qualified by reference to these filings. You should review the
complete document to evaluate these statements.
The SEC allows us to incorporate by reference much of the
information that we file with it, which means that we can
disclose important information to you by referring you to those
publicly available documents. The information that we
incorporate by reference is an important part of this
prospectus. Some information contained in this prospectus
updates the information incorporated by reference, and
information that we file in the future with the SEC will
automatically modify, supersede or update this prospectus. In
other words, in the case of a conflict or inconsistency between
information in this prospectus
and/or
information incorporated by reference into this prospectus, you
should rely on the information contained in the document that
was filed later.
This prospectus incorporates by reference the documents listed
below and any filings we make with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 after the initial filing of the
registration statement related to this prospectus until we and
the Trusts sell all the securities offered by this prospectus
or, if later, the date on which any of our affiliates cease
offering and selling these securities in market-making
transactions pursuant to this prospectus:
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Annual Report on
Form 10-K
for the year ended December 31, 2007; and
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Current Reports on
Form 8-K
filed on March 17, 2008, March 7, 2008, March
6, 2008, March 4, 2008 (which amends the Current
Report on
Form 8-K
dated July 1, 2007), February 28, 2008,
January 22, 2008, January 17, 2008, January 10,
2008, and January 3, 2008.
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The description of our common stock, which is registered under
Section 12 of the Securities Exchange Act, in our
Form 8-A
filed with the SEC on April 28, 1967, including any
subsequently filed amendments and reports updating such
description.
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You may request a copy of these filings, other than an exhibit
to a filing unless that exhibit is specifically incorporated by
reference into that filing, at no cost, by writing to us at the
following address or calling us at the following telephone
number:
Jay Gould Sr.
Investor Relations
Huntington Bancshares Incorporated
41 South High Street
Columbus, Ohio 43287
Phone:
614-480-4060
3
FORWARD-LOOKING
STATEMENTS
This prospectus and the accompanying prospectus supplement
contains or incorporates by reference forward-looking statements
about us. These statements include descriptions of products or
services, our plans or objectives for future operations,
including pending acquisitions, and forecasts of revenues,
earnings, cash flows, or other measures of economic performance.
Forward-looking statements can be identified by the fact that
they do not relate strictly to historical or current facts.
By their nature, forward-looking statements are subject to
numerous assumptions, risks, and uncertainties. A number of
factors could cause actual conditions, events, or results to
differ significantly from those described in the forward-looking
statements. These factors include, but are not limited to, those
which may be set forth in the accompanying prospectus supplement
and those under the heading Risk Factors included in
our Annual Reports on
Form 10-K,
and other factors described in our periodic reports filed from
time to time with the Securities and Exchange Commission.
We encourage you to understand forward-looking statements to be
strategic objectives rather than absolute forecasts of future
performance. Forward-looking statements speak only as of the
date they are made. We assume no obligation to update
forward-looking statements to reflect circumstances or events
that occur after the date the forward-looking statements were
made or to reflect the occurrence of unanticipated events.
HUNTINGTON
BANCSHARES INCORPORATED
We are a multi-state diversified financial holding company
organized under Maryland law in 1966 and headquartered in
Columbus, Ohio. Through our subsidiaries, including our bank
subsidiary, The Huntington National Bank, organized in 1866, we
provide full-service commercial and consumer banking services,
mortgage banking services, automobile financing, equipment
leasing, investment management, trust services, brokerage
services, reinsurance of private mortgage insurance, reinsurance
of credit life and disability insurance, retail and commercial
insurance agency services, and other financial products and
services. Our banking offices are located in Ohio, Michigan,
Pennsylvania, Indiana, West Virginia and Kentucky. Selected
financial service activities are also conducted in other states
including: Dealer Sales offices in Arizona, Florida, Georgia,
Nevada, New Jersey, New York, North Carolina, South Carolina and
Tennessee; Private Financial and Capital Markets Group offices
in Florida; and Mortgage Banking offices in Maryland and New
Jersey. Sky Insurance offers retail and commercial insurance
agency services, in Ohio, Pennsylvania and Indiana.
International banking services are available through the
headquarters office in Columbus and a limited purpose office
located in both the Cayman Islands and Hong Kong.
As a registered financial holding company, we are subject to the
supervision of the Federal Reserve. We are required to file with
the Federal Reserve reports and other information regarding our
business operations and the business operations of our
subsidiaries.
We are a separate and distinct legal entity from our bank and
other subsidiaries. Our principal source of funds to make
payments on our securities is dividends from The Huntington
National Bank. Various federal and state statutes and
regulations limit the amount of dividends that our banking and
other subsidiaries may pay to us without regulatory approval. At
December 31, 2007, The Huntington National Bank could not
have declared and paid any additional dividends to us without
regulatory approval. In addition, if any of our subsidiaries
becomes insolvent, the direct creditors of that subsidiary will
have a prior claim on its assets. The notes to our consolidated
financial statements contained in our annual and quarterly
filings with the SEC, which are incorporated by reference into
this prospectus, describe the legal and contractual restrictions
on the ability of our subsidiaries to make payment to us of
dividends, loans, or advances.
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USE OF
PROCEEDS
Unless the applicable prospectus supplement states otherwise,
the net proceeds from the sale of the securities will be added
to our general funds and will be available for general corporate
purposes, including, among other things:
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the repayment of existing indebtedness,
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the repurchase of our common stock,
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investments in, or extensions of credit to, our existing or
future subsidiaries, and
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the financing of possible acquisitions.
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Pending such use, we may temporarily invest the net proceeds in
short-term securities or reduce our short-term indebtedness, or
we may hold the net proceeds in deposit accounts in our
subsidiary bank.
Based upon our historical and anticipated future growth and our
financial needs, we may engage in additional financings of a
character and amount that we determine as the need arises.
RATIO OF EARNINGS
TO FIXED CHARGES
Our consolidated ratio of earnings to fixed charges for each of
the five years ended December 31, 2007 are indicated below.
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Year Ended December 31,
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2007
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2006
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2005
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2004
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2003
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Ratio of earnings to fixed charges:
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Excluding interest on deposits
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1.05
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x
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2.49
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x
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3.23
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x
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3.88
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x
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3.91
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Including interest on deposits
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1.02
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x
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1.48
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x
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1.79
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x
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2.23
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x
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2.12
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x
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The ratio of earnings to fixed charges is calculated as follows:
(income before income taxes) + (fixed
charges)
(fixed charges)
Fixed charges consist of:
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the consolidated interest expense of Huntington, including or
excluding the interest expense of deposits as indicated, and
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one-third of Huntingtons rental expense, net of rental
income from subleases, which we believe is representative of the
interest portion of the rental payments.
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Currently, we have no shares of preferred stock outstanding and
have not paid any dividends on preferred stock in any of the
periods presented. Therefore, the ratio of earnings to combined
fixed charges and preferred stock dividends is not different
from the ratio of earnings to fixed charges presented above.
CERTAIN ERISA
CONSIDERATIONS
Unless otherwise indicated in the applicable prospectus
supplement, the offered securities may, subject to certain legal
restrictions, be held by (i) pension, profit sharing, and
other employee benefit plans which are subject to Title I
of the Employee Retirement Security Act of 1974, as amended
(which we refer to as ERISA), (ii) plans,
accounts, and other arrangements that are subject to
Section 4975 of the Internal Revenue Code of 1986, as
amended (which we refer to as the Code), or
provisions under federal, state, local,
non-U.S., or
other laws or regulations that are similar to any of the
provisions of Title I of ERISA or Section 4975 of the
Code (which we refer to as Similar Laws), and
(iii) entities whose underlying assets are considered to
include plan assets of any such plans, accounts, or
arrangements. Section 406 of ERISA and Section 4975 of
the Code prohibit plans from engaging in specified transactions
involving plan assets with persons who are
parties in interest under ERISA or
disqualified persons under the Code with respect to
such pension, profit sharing, or other employee benefit plans
that are subject to Section 406 of ERISA or
Section 4975 of the Code. A violation of these prohibited
transaction rules may result in an excise tax or other
liabilities under ERISA
and/or
Section 4975 of the Code for such persons, unless exemptive
relief is available under
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an applicable statutory, class, or administrative exemption. A
fiduciary of any such plan, account, or arrangement must
determine that the purchase and holding of an interest in the
offered securities is consistent with its fiduciary duties and
will not constitute or result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975
of the Code, or a violation under any applicable Similar Laws.
LEGAL
MATTERS
Unless otherwise indicated in the applicable prospectus
supplement, certain legal matters will be passed upon for us by
Wachtell, Lipton, Rosen & Katz and Venable LLP.
Richards, Layton & Finger, P.A., special Delaware
counsel to the Trusts, will pass upon certain legal matters for
the Trusts. Unless otherwise provided in the applicable
prospectus supplement, certain legal matters will be passed upon
for any underwriters or agents by their own counsel.
EXPERTS
The consolidated financial statements incorporated in this
prospectus by reference from our Annual Report on
Form 10-K
for the year ended December 31, 2007 and the effectiveness
of Huntington Bancshares Incorporated internal control over
financial reporting have been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as
stated in their reports (which reports (1) express an
unqualified opinion on the consolidated financial statements and
includes an explanatory paragraph related to the adoption of
Statement of Financial Accounting Standards (SFAS)
No. 123(R), Share-Based Payment,
SFAS No. 156, Accounting for Servicing of
Financial Assets, and SFAS No. 158,
Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans, in 2006, and (2) express an
unqualified opinion on the effectiveness of internal control
over financial reporting), which are incorporated herein by
reference. Such financial statements have been so incorporated
in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
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