UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Introductory Note
On March 30, 2021, The Charles Schwab Corporation (“CSC”) issued and sold 24,000,000 depositary shares (“Depositary Shares”), each representing a 1/40th ownership interest in a share of 4.450% non-cumulative perpetual preferred stock, Series J, $0.01 par value per share, with a liquidation preference of $1,000 per share (equivalent to $25 per Depositary Share) (the “Series J Preferred Stock”). The net proceeds of the offering of the 24,000,000 Depositary Shares were approximately $583,500,000, after deducting underwriting discounts and commissions and estimated offering expenses. This issuance is referred to as the “Preferred Issuance.”
Item 3.03 | Material Modification to Rights of Security Holders |
In connection with the Preferred Issuance, CSC filed a Certificate of Designations (the “Certificate of Designations”) with the Secretary of State of the State of Delaware, establishing the voting rights, powers, preferences and privileges, and the relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of the Series J Preferred Stock on March 29, 2021. Holders of the Depositary Shares will be entitled to all proportional rights and preferences of the Series J Preferred Stock (including dividend, voting, redemption and liquidation rights).
Under the terms of the Series J Preferred Stock, the ability of CSC to pay dividends on, make distributions with respect to, or to repurchase, redeem or acquire its common stock, nonvoting common stock or any preferred stock ranking on parity with or junior to the Series J Preferred Stock, is subject to restrictions in the event that CSC does not declare and either pay or set aside a sum sufficient for payment of dividends on the Series J Preferred Stock for the immediately preceding dividend period.
The terms of the Series J Preferred Stock are more fully described in the Certificate of Designations which is included as Exhibit 3.1 to this Current Report on Form 8–K and is incorporated by reference herein.
Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year |
The Certificate of Designations became effective upon filing with the Secretary of State of the State of Delaware. The terms of the Series J Preferred Stock are more fully described in the Certificate of Designations which is included as Exhibit 3.1 to this Current Report on Form 8–K and is incorporated by reference herein.
Item 8.01 | Other Events |
Preferred Underwriting Agreement and other Preferred Issuance Information
On March 23, 2021, in connection with the Preferred Issuance, CSC entered into an Underwriting Agreement (the “Preferred Underwriting Agreement”) with BofA Securities, Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC as the representatives of the several underwriters named therein (collectively, the “Preferred Underwriters”), under which CSC agreed to sell to the Preferred Underwriters 24,000,000 shares of Depositary Shares, each representing a 1/40th ownership interest in a share of Series J Preferred Stock.
The Preferred Underwriting Agreement contains customary representations, warranties and agreements of CSC, conditions to closing, indemnification rights and obligations of the parties, and termination provisions. Under the terms of the Preferred Underwriting Agreement, CSC agreed to indemnify the Preferred Underwriters against certain specified types of liabilities, including liabilities under the Securities Act of 1933, as amended, and to contribute to payments the Preferred Underwriters may be required to make in respect of these liabilities.
The offering was made pursuant to the prospectus supplement dated March 23, 2021 and the accompanying prospectus dated December 4, 2020, filed with the Securities and Exchange Commission pursuant to CSC’s effective registration statement on Form S-3 (File No. 333-251156) (the “Registration Statement”).
Copies of (a) the Preferred Underwriting Agreement, (b) the Certificate of Designations to which the Form of Certificate Representing the Series J Preferred Stock is attached as Exhibit A, (c) the Deposit Agreement, dated March 30, 2021, between CSC and Equiniti Trust Company, as Depositary, to which the Form of Depositary Share Receipt is attached as Exhibit A and (d) a validity opinion with respect to the Depositary Shares and the Series J Preferred Stock are attached as Exhibits 1.1, 3.1, 4.1 and 5.1, respectively, to this Current Report on Form 8-K and are incorporated by reference into CSC’s Registration Statement.
Use of Proceeds to Redeem Series C Preferred Stock and Corresponding Depositary Shares
CSC intends to use the net proceeds from the Preferred Issuance to redeem all of the outstanding shares of the non-cumulative perpetual preferred stock, Series C (“Series C Preferred Stock”) and the corresponding depositary shares, each representing an interest in a share of Series C Preferred Stock. In accordance with the Certificate of Designations for the Series C Preferred Stock, such shares may only be redeemed on a dividend payment date and notice of the redemption must be given not less than 30 days nor more than 60 days prior to the redemption date. CSC intends to give notice that it will redeem, on June 1, 2021, all of the Series C Preferred Stock and the corresponding depositary shares, and expects to provide that notice in April 2021. This disclosure does not constitute notice of redemption with respect to the Series C Preferred Stock or the corresponding depositary shares.
Item 9.01 | Financial Statements and Exhibits |
Signature(s)
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
THE CHARLES SCHWAB CORPORATION | ||||||
Date: March 30, 2021 | By: | /s/ Peter Crawford | ||||
Peter Crawford | ||||||
Executive Vice President and Chief Financial Officer |