POSTED: 1:30 a.m. HST, Jun 16, 2011
The U.S. Treasury Department plans to sell the 5.6 million shares it owns of Central Pacific Financial Corp.
A prospectus filed Wednesday by the parent of Central Pacific Bank indicated the shares, which represent about 14 percent of Central Pacific’s 39.65 million outstanding shares, will be sold this month to institutional investors.
The Treasury Department, which acquired the shares at $10 each earlier this year as part of the bank’s $325 million recapitalization, didn’t respond to questions about the price it would be seeking or the timing of the sale.
Central Pacific’s stock closed down $1.71, or 12.1 percent, to $12.42 Wednesday on the New York Stock Exchange. The Treasury offering was announced before the market opened.
New York-based Sandler O’Neill & Partners is the lead underwriter for the Treasury’s sale.
The Treasury gave Central Pacific $135 million in January 2009 in exchange for stock to help strengthen CPB after the financial collapse of 2008.
If the Treasury sold all its shares at Wednesday’s closing price, it would get back only $69.6 million, or just over half of its original investment. However, the shares will have to be sold at a discount to the prevailing price to attract interest since investors could otherwise purchase the stock outside of the offering.
A second prospectus filed Wednesday by the bank said other private shareholders would be selling up to 12.8 million of previously registered shares that were purchased at $10 apiece during the bank’s recapitalization.
Central Pacific earned $4.6 million last quarter, its first profit in two years. The bank has been getting rid of troubled mortgages, mostly in California, and raising money to improve its financial position.
Last month, federal and state regulators lifted a consent order that had been placed upon the bank 17 months earlier that mandated Central Pacific improve its capital ratio and other segments of its operations.