This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Amendment To CapitalSource Senior Secured Notes Approved

CHEVY CHASE, Md., Dec. 9, 2010 /PRNewswire-FirstCall/ -- CapitalSource Inc. (NYSE: CSE) today announced that holders of its 12.75% First Priority Senior Secured Notes due 2014 have approved an amendment (the "Amendment") which creates substantial financial flexibility, including the opportunity to buy back shares.  As a result, the Company announced that its Board authorized the repurchase of up to $150 million of its common stock over a period of up to two years.

There are four principal components to the Amendment as follows:

  • The Company is permitted to use available cash to purchase its convertible debentures redeemable in July 2011 and July 2012;
  • The Company's restricted payments capacity, which can be used for share repurchases among other purposes, was increased to approximately $164 million as of September 30, 2010 as a result of modifications to the formulas for calculating restricted payment capacity. The restricted payments formula was revised such that 75% of pre-tax earnings will be added to restricted payment capacity each quarter going forward.
  • The Company is permitted to contribute the equity in its remaining four securitizations to CapitalSource Bank. Those securitizations included $1.1 billion of loans and net equity of approximately $235 million as of September 30, 2010. Any such contributions may require regulatory or other approvals not related to the Senior Secured Notes; and
  • The Amendment provides added flexibility to leverage assets by allowing the Company to obtain secured debt with a minimum advance rate of 40%, rather than the previous 75% requirement.

"This Amendment accomplishes several important strategic objectives and accelerates our opportunity to return capital to shareholders in the form of the share buyback announced today," said John K. Delaney, CapitalSource Executive Chairman.  "The significant level of excess capital and our strong liquidity position at the parent company permit us to return capital to shareholders, enhance our industry leading capital levels at CapitalSource Bank, and position the Company for more rapid EPS growth."

"The Amendment allows us to redeem our outstanding convertible debt with liquidity from our portfolio rather than through an expensive debt or dilutive equity transaction," commented Donald F. Cole, CapitalSource Chief Financial Officer. "It also provides us with additional flexibility to utilize the significant amount of cash we expect to generate from the continuing liquidation of our parent company loan portfolio to reduce our level of excess capital." 

Any share repurchases made under the plan announced today will be made through open market purchases or privately negotiated transactions from time to time for a period of up to two years.  The amount and exact timing of any repurchases will depend upon market conditions and other factors.  There are no assurances the Company will repurchase any shares during the period and the plan may be suspended or discontinued at any time.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,131.97 +100.83 0.59%
S&P 500 1,998.98 +14.85 0.75%
NASDAQ 4,552.7590 +33.8570 0.75%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs