- Holders of GECC Preferred Stock to
Receive GE Preferred Stock
General Electric Company (NYSE:GE) today commenced the
previously announced realignment and reorganization (the
“Reorganization”) of the businesses of General Electric Capital
Corporation (“GECC”), which GE expects to complete by December 3,
2015. The Reorganization is being effected as part of GE’s plan
announced on April 10, 2015 (the “GE Capital Exit Plan”) to reduce
the size of its financial services businesses through the sale of
most of GECC’s assets and to focus on continued investment and
growth in GE’s industrial businesses.
The following transactions, among others, are expected to occur
as part of the Reorganization:
- GE will separate GECC’s international
and U.S. operations;
- GECC’s international operations will be
consolidated under a new international holding company, GE Capital
International Holdings Limited (“GE Capital International
Holdings”), which will have a separate capital structure and be
supervised by the U.K. Prudential Regulation Authority;
- GE Capital International Holdings will
assume the guarantee originally provided by GECC of the notes
issued by GE Capital International Funding Company in the exchange
offers completed in October 2015 and will guarantee the outstanding
debt obligations of four foreign financing companies that have been
used to finance GECC’s operations;
- GECC’s U.S. operations will be
consolidated under a new U.S. holding company, GE Capital US
Holdings, Inc. (“GE Capital US Holdings”);
- GECC will merge with and into GE (the
“GECC/GE Merger”) on December 2, 2015 to assure compliance with
debt covenants as GECC exits the assets planned for disposition as
part of the GE Capital Exit Plan. Upon the Merger, the obligations
of GECC under its then outstanding debt obligations will be assumed
by GE; and
- A new U.S. intermediate holding company
owned by GE, GE Capital Global Holdings, will replace GECC as the
holding company of GECC’s operations and become the holding company
of GE Capital International Holdings and GE Capital US
Holdings.
The completion of these actions represents a critical milestone
on our path toward applying for de-designation as a nonbank
systemically important financial institution (“nonbank SIFI”) in
the first quarter of 2016.
GE Preferred Stock
In addition, as part of the Reorganization, in a series of
transactions effected under Delaware corporate law, the holders of
the three outstanding series of preferred stock issued by GECC with
an aggregate liquidation preference of $5.0 billion will receive on
December 3, 2015 preferred stock to be newly issued by GE in three
corresponding series (the “New GE Preferred Stock”) with an
aggregate liquidation preference of approximately $5.9 billion.
The amounts of New GE Preferred Stock to be received for each
share of existing GECC preferred stock and the terms of the New GE
Preferred Stock have been determined in order to provide holders of
existing GECC preferred at least equivalent value. The terms have
also been designed so that the New GE Preferred Stock continues to
be eligible for the dividends received deduction and to avoid
treatment of the New GE Preferred Stock as “fast pay stock” for
U.S. federal income tax purposes. Instruments characterized as
“fast pay stock” are subject to onerous information reporting
obligations, and many market participants are either unable or
unwilling to own instruments so characterized.
As a result, holders of existing GECC preferred stock that
continue to hold on December 3, 2015 will automatically
receive:
- New Series A: 123.45 shares (or
$123,450 aggregate liquidation preference) of GE’s 4.00%
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
Series A, $1.00 par value, with a liquidation preference of $1,000
per share (the “New Series A”) for each share of GECC’s 7.125%
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
Series A, $0.01 par value, with a liquidation preference of
$100,000 per share (the “Old Series A”), held;
- New Series B: 118.43 shares (or
$118,430 aggregate liquidation preference) of GE’s 4.10%
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
Series B, $1.00 par value, with a liquidation preference of $1,000
per share (the “New Series B”) for each share of GECC’s 6.250%
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
Series B, $0.01 par value, with a liquidation preference of
$100,000 per share (the “Old Series B”), held; and
- New Series C: 109.41 shares (or
$109,410 aggregate liquidation preference) of GE’s 4.20%
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
Series C, $1.00 par value, with a liquidation preference of $1,000
per share (the “New Series C”) for each share of GECC’s 5.25%
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
Series C, $0.01 par value, with a liquidation preference of
$100,000 per share (the “Old Series C”), held.
No fractional shares or fractional share certificates will be
distributed. Instead, fractions will be bundled and sold and the
cash proceeds therefrom (without interest) will be delivered in
lieu of fractional shares.
The transactions pursuant to which holders of existing GECC
preferred stock will receive New GE Preferred Stock will be carried
out under the applicable provisions of the General Corporation Law
of the State of Delaware (the “DGCL”), and holders of existing GECC
preferred stock are not entitled to vote on or consent to these
transactions. However, holders of existing GECC preferred stock
that continue to hold through December 3, 2015 will be eligible to
exercise appraisal rights to the extent set forth in Section 262 of
the DGCL.
Interim Dividend. The holders of existing GECC preferred stock
that continue to hold as of the close of business on December 2,
2015 will receive cash representing an interim cash dividend
through and including December 2, 2015 on the existing GECC
preferred stock, in an amount equal to $3,325.00 per share of Old
Series A, $2,916.67 per share of Old Series B and $2,450.00 per
share of Old Series C.
Dividends. GE will pay, to the extent of lawfully available
funds, dividends on each series of the New GE Preferred Stock,
when, as and if declared by our board of directors (the “Board”)
(or a duly authorized committee thereof) as set forth below:
- New Series A. With respect to the New
Series A, dividends from and including December 3, 2015 to, but
excluding, June 15, 2022 at a rate of 4.00% per annum, payable
semi-annually, in arrears, on June 15 and December 15 of each year,
beginning on December 15, 2015; and, from and including June 15,
2022, at a floating rate equal to three-month LIBOR plus a spread
of 2.28% per annum, payable quarterly, in arrears, on March 15,
June 15, September 15 and December 15 of each year, beginning on
September 15, 2022.
- New Series B. With respect to the New
Series B, dividends from and including December 3, 2015 to, but
excluding, December 15, 2022 at a rate of 4.10% per annum, payable
semi-annually, in arrears, on June 15 and December 15 of each year,
beginning on December 15, 2015; and, from and including December
15, 2022, dividends at a floating rate equal to three-month LIBOR
plus a spread of 2.32% per annum, payable quarterly, in arrears, on
March 15, June 15, September 15 and December 15 of each year
beginning on March 15, 2023.
- New Series C. With respect to the New
Series C, dividends from and including December 3, 2015 to, but
excluding, June 15, 2023 at a rate of 4.20% per annum, payable
semi-annually, in arrears, on June 15 and December 15 of each year,
beginning on December 15, 2015; and, from and including June 15,
2023, dividends at a floating rate equal to three-month LIBOR plus
a spread of 2.37% per annum, payable quarterly, in arrears, on
March 15, June 15, September 15 and December 15 of each year
beginning on September 15, 2023.
Dividend
Payments
Series
Fixed Floating Dates Rate
Payment Dates Beginning Dates
Rate(3-monthLIBORplus aspread of)
Payment Dates Beginning From To (but
excluding) From (and including)
New Series A December 3, 2015 June 15,
2022 4.00%
June 15 andDecember 15
December 15, 2015 June 15, 2022 2.28%
March 15,June 15,September15 andDecember
15
September 15, 2022
New Series B December 15, 2022
4.10% December 15, 2022 2.32% March 15, 2023.
New Series
C June 15, 2023 4.20%
June 15, 2023 2.37% September 15, 2023
The dividend payment dates for the New GE Preferred Stock are
the same as the dividend payment dates for the existing GECC
preferred stock. Dividends on each series of the New GE Preferred
Stock, like the existing GECC preferred stock, will not be
cumulative and will not be mandatory. If GE’s Board (or a duly
authorized committee thereof) does not declare a dividend on any
series of New GE Preferred Stock in respect of a dividend period,
then no dividend shall be deemed to have accrued for such dividend
period, be payable on the applicable dividend payment date (as
defined herein) or be cumulative, and GE will have no obligation to
pay any dividend for that dividend period, whether or not GE’s
Board (or a duly authorized committee thereof) declares a dividend
for any future dividend period on such series of New GE Preferred
Stock, on any other series of New GE Preferred Stock or on any
other series of our preferred stock or common stock, or upon a
redemption in whole or in part of any series of the New GE
Preferred Stock.
Redemption. GE may redeem any of the New GE Preferred Stock, at
its option, to the extent of lawfully available funds, in whole or
in part, from time to time, on any dividend payment date on or
after June 15, 2022 (in respect of the New Series A), December 15,
2022 (in respect of the New Series B) or June 15, 2023 (with
respect to the New Series C), in each case, at a redemption price
equal to $1,000 per share, plus any declared and unpaid dividends
to, but not including, the redemption date of the relevant series
of the New GE Preferred Stock. These dates correspond to the same
redemption dates under the existing GECC preferred stock. The
optional redemption provisions under the existing GECC preferred
stock relating to a regulatory capital event have not been included
in the New GE Preferred Stock because GE itself is not subject to
regulatory capital requirements.
Comparison of Terms. Below is a summary of certain differences
between the existing GECC preferred stock and the New GE Preferred
Stock:
Terms Existing
GECC Preferred Stock New GE Preferred Stock Par
Value: $0.01 per share $1.00 per share Liquidation
Preference: $100,000 per share $1,000 per share
Optional Redemption Price, per share (plus
anydeclared and unpaid dividends to but not including the
redemption date):
$100,000 $1,000 Aggregate Liquidation Preference:
Series A $2,250,000,000 $2,777,625,000 Series
B $1,750,000,000 $2,072,525,000 Series C
$1,000,000,000 $1,094,100,000 Number of Shares:
Series A 22,500 shares 2,777,625 shares Series B
17,500 shares 2,072,525 shares Series C
10,000 shares 1,094,100 shares
Dividend Rates(Non- Cumulative)
Fixed Rate Periods Series A 7.125% 4.00%
Series B 6.250% 4.10% Series C 5.25%
4.20%
Floating Rate Periods (3-monthLIBOR plus
aspread of)
Series A 5.296% 2.28% Series B 4.704%
2.32% Series C 2.967% 2.37% Regulatory
Capital Redemption
Existing GECC preferred stockcould be
redeemed in the event ofcertain regulatory capital events,and any
redemption was subjectto prior approval by the FederalReserve Board
and to thesatisfaction of certain conditionsset forth in the
capital guidelinesor regulations of the FederalReserve Board.
New GE Preferred Stockdoes not contain
similarprovisions.
The New GE Preferred Stock will have the
following CUSIP Numbers and ISINs:
New Notes
CUSIP Number
ISIN New Series A 369604 BM4 US369604BM44 New
Series B 369604 BN2 US369604BN27 New Series C 369604 BP7
US369604BP74
Additional Information
The New GE Preferred Stock is being issued pursuant to an
effective registration statement filed under the Securities Act of
1933. A copy of the prospectus supplement and related prospectus
pursuant to which the New GE Preferred Stock will be issued may be
obtained free of charge by requesting a copy from Brigid M. Tobin
(Investor Relations) (203 357 4732) at: Brigid.m.tobin@ge.com or
201 High Ridge Road, Stamford, CT 06905-3417.
Forward-Looking Statements
This communication contains “forward-looking statements” —that
is, statements related to future, not past, events. In this
context, forward-looking statements often address our expected
future business and financial performance and financial condition,
and often contain words such as “expect,” “anticipate,” “intend,”
“plan,” “believe,” “seek,” “see,” “will,” “would,” or “target.”
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, such as statements about the
consummation of the Reorganization, the GECC/GE Merger and the
issuance of the New GE Preferred Stock. Uncertainties that could
cause our actual results to be materially different than those
expressed in our forward-looking statements include the failure to
consummate any of these transactions or to make or take any filing
or other action required to consummate any such transaction on a
timely matter or at all. These or other uncertainties may cause our
actual future results to be materially different from those
expressed in our forward-looking statements.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151201006722/en/
General Electric CompanyInvestors:Matt Cribbins,
203-373-2424matthewg.cribbins@ge.comorMedia:Seth Martin,
203-572-3567seth.martin@ge.com
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