(MT Newswires) -- Funds managed by Warburg Pincus and Centerbridge Partners will buy a combined $400 million in new stock issued by the Banc of California (BANC) and PacWest Bancorp following the completion of their proposed all-stock merger, the companies said on Wednesday.
The private equity firms will own a combined 19% of the surviving bank company, which will be led by Bank of California CEO Jared Wolff and will operate under the Banc of California name. The deal is valued at around $1.1 billion. The companies said Todd Schell, a principal from Warburg Pincus' offices in New York, will represent the firm on the new company's board of directors. Eight of the remaining positions will be filled by existing Banc of California representatives and three from the existing PacWest board.
Under terms of the proposed equity raise, which followed "extensive investor due diligence" by the firms, Banc of California will sell around 21.8 million common shares valued at $12.30 apiece and 10.8 million shares of a new class of non-voting, common-equivalent stock also valued at $12.30 per share. The Warburg investors also will receive seven-year warrants to buy up to 15.9 million additional shares at $15.375 each while the Centerbridge investors will receive warrants to acquire up to 3 million more shares. The warrants also are subject to mandatory exercise when the market price reaches $24.60 per share - or 100% of the issued price - over a specified period.
The deal is expected to close later this year or early in 2024, subject to regulatory and shareholder approvals. The private equity investment is slated to close concurrently with the bank merger.
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