Americas deals of the year

Author: | Published: 1 May 2010

Debt and equity-linked
Securitisation
Equity
M&A
Private equity

Debt and equity-linked

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L-R: Rick Viola of McGuire Woods, Glen Rae of Bank of America, James Tanenbaum of Morrison & Foerster, Daniel Sternberg of Cleary Gottlieb Steen & Hamilton

Bank of America’s Common Equivalent Securities

Bank of America Corporation issued and sold $19.9 billion of a new security in an underwritten public offering. The novel notes are called Common Equivalent Securities and they have two main components.

First, there is a preferred security called a depositary share that automatically converts into common stock upon receipt of stockholder approval to increase the number of shares in the authorised common stock. If approval is not granted, the depositary shares partially convert as the issuer delivers 200 million of its own common shares to be distributed pro rata. Second, there is a contingent warrant for holders to purchase a fraction of a share if approval is denied.