PNC Bank 2008 Annual Report Download - page 141

forth in the replacement capital covenant with respect to the
Normal APEX (the “APEX RCC”) or the replacement capital
covenant with respect to the Depositary Shares (the
“Depositary Shares RCC”), as applicable.
As of December 31, 2008, each of the APEX RCC and the
Depositary Shares RCC are for the benefit of holders of our
$700 million of 6.875% Subordinated Notes Due 2019.
In May 2008, we issued $500 million of Depositary Shares,
each representing a fractional interest in a share of PNC
Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock,
Series K. Dividends are payable if and when declared
beginning November 21, 2008 and then each May 21 and
November 21 until May 21, 2013. After that date, dividends
will be payable each 21st of August, November, February and
May. Dividends will be paid at a rate of 8.25% prior to
May 21, 2013 and at a rate of three-month LIBOR plus 422
basis points beginning May 21, 2013.
Series A through D are cumulative and, except for Series B,
are redeemable at our option. Annual dividends on Series A, B
and D preferred stock total $1.80 per share and on Series C
preferred stock total $1.60 per share. Holders of Series A
through D preferred stock are entitled to a number of votes
equal to the number of full shares of common stock into which
such preferred stock is convertible. Series A through D
preferred stock have the following conversion privileges:
(i) one share of Series A or Series B is convertible into eight
shares of PNC common stock; and (ii) 2.4 shares of Series C
or Series D are convertible into four shares of PNC common
stock.
TARP Warrant
A warrant issued to the US Treasury in connection with the
preferred stock described above enables the US Treasury to
purchase up to approximately 16.9 million shares of PNC
common stock at an exercise price of $67.33 per share.
However, if PNC receives aggregate gross proceeds of at least
$7.6 billion from one or more qualified equity offerings on or
before December 31, 2009, the number of shares of PNC
common stock underlying the warrant then held by the US
Treasury will be reduced by 50% of the number of shares
originally underlying the warrant.
The warrant is immediately exercisable in full or in part,
provided that the US Treasury may not transfer or exercise a
portion of the warrant representing in the aggregate more than
50% of the shares underlying the warrant prior to the earlier of
(i) December 31, 2009 and (ii) the date on which PNC has
received aggregate gross proceeds of not less than 100% of
the $7.6 billion preferred stock issue price from one or more
qualified equity offerings. The warrant expires on
December 31, 2018.
The TARP warrant was valued at $304 million at
December 31, 2008 and is included in Capital surplus-
common stock and other on our Consolidated Balance Sheet.
National City Warrants
As part of the National City transaction, warrants issued by
National City converted into warrants to purchase PNC
common stock. The holder has the option to exercise 28,022
warrants, on a daily basis, commencing June 15, 2011 and
ending on July 15, 2011, and 28,023 warrants, on a daily
basis, commencing July 18, 2011 and ending on October 20,
2011. The strike price of these warrants is $750 per share.
Upon exercise, PNC will deliver common shares with a
market value equal to the number of warrants exercised
multiplied by the excess of the market price of PNC common
stock over the strike price. The maximum number of shares
that could be required to be issued is approximately
5.0 million, subject to adjustment in the case of certain events,
make-whole fundamental changes or early termination. PNC
has reserved 5.0 million shares for issuance pursuant to the
warrants and 3.6 million shares for issuance pursuant to the
related convertible senior notes.
Other Shareholders’ Equity Matters
We have a dividend reinvestment and stock purchase plan.
Holders of preferred stock and PNC common stock may
participate in the plan, which provides that additional shares
of common stock may be purchased at market value with
reinvested dividends and voluntary cash payments. Common
shares issued pursuant to this plan were: 716,819 shares in
2008, 571,271 shares in 2007 and 535,394 shares in 2006.
At December 31, 2008, we had reserved approximately
94.7 million common shares to be issued in connection with
certain stock plans and the conversion of certain debt and
equity securities.
Effective October 4, 2007, our Board of Directors terminated
the 2005 stock repurchase program and approved a new stock
repurchase program to purchase up to 25 million shares of
PNC common stock on the open market or in privately
negotiated transactions. The 2007 program will remain in
effect until fully utilized or until modified, superseded or
terminated. We did not repurchase any shares during 2008
under the 2007 program. During 2007, we purchased
11 million common shares at a total cost of approximately
$800 million under the 2005 and 2007 programs.
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