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Georgia
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No. 001-35095
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No. 58-180-7304
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(State or other jurisdiction of
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incorporation)
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Identification No.)
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Blairsville, Georgia 30512
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Not applicable
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(Former name or former address, if changed since last report)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))
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On March 5, 2014, United Community Banks, Inc. issued a press release announcing that the company and its wholly-owned banking subsidiary, United Community Bank (collectively, “United”), and Fletcher International, Ltd. (“Fletcher”) agreed to settle all potential claims and counterclaims between them relating to or arising out of (i) the previously disclosed dispute concerning their respective rights and obligations under a Securities Purchase Agreement, dated April 1, 2010, between United and Fletcher (the “Securities Purchase Agreement”), and a $30 million warrant (the “Warrant”) granted to Fletcher by United in April 2010 to purchase non-voting Common Stock Equivalent Junior Preferred Stock (“Junior Preferred Stock”), and (ii) an Asset Purchase Agreement, dated April 1, 2010, between Fletcher International, Inc. and its affiliates (which are separate related entities of Fletcher not under its control) and United (the “Asset Purchase Agreement”). The transactions contemplated by the Securities Purchase Agreement, the Warrant and the Asset Purchase Agreement are referred to herein collectively as the “2010 Transactions”.
The Warrant, which UCBI granted to Fletcher in connection with the transactions embodied in the Securities Purchase Agreement and Asset Purchase Agreement, could only be exercised by net share settlement (cashless exercise) for nine years from May 26, 2010, subject to limited extensions upon certain events and certain conditions precedent.
As disclosed on February 22, 2013, United and FILB Co-Investments LLC (“FILB-Co”) agreed to settle a lawsuit between United and FILB-Co with respect to certain contractual rights under the Securities Purchase Agreement that Fletcher had assigned to FILB-Co. Fletcher did not assign the Warrant or all of its rights to an alleged “Registration Failure” penalty under the Securities Purchase Agreement (apart from a claim for a portion thereof) to FILB-Co, and United has received purported warrant exercise notices from Fletcher that include incorrect calculations of the number of settlement shares Fletcher would receive upon exercise and demands for the payment of such a Registration Failure penalty. Fletcher had also made claims related to money held in a loan servicing account with United related to the Asset Purchase Agreement.
In order to resolve all potential claims and counterclaims between the parties relating to or arising out of the 2010 Transactions, United and Fletcher (represented by its Chapter 11 Trustee) have entered into a settlement agreement pursuant to which (i) United has agreed to purchase the Warrant and in exchange, deliver 640,000 shares of its common stock and cash that, together with the common stock, will have a value of $12 million, (ii) Fletcher has agreed to relinquish any rights it may have under the Warrant, as well as the Securities Purchase Agreement and Asset Purchase Agreement, and (iii) United and Fletcher have agreed to release any claims against each other relating to the 2010 Transactions. The final cash payment to Fletcher will be the difference between the value of the 640,000 shares of United’s common stock and $12 million, which is expected to be offset by the reserve that was previously established at the time of the 2013 settlement with FILB-Co for potential claims that Fletcher might make against United. Therefore, no current earnings impact is expected as a result of the settlement.
United believes that the Fletcher settlement will finally resolve all remaining claims by Fletcher related to the 2010 Transactions and will terminate the Warrant and all contractual obligations of United to Fletcher with respect to the 2010 Transactions. The settlement agreement and the transactions contemplated thereby are subject to bankruptcy court approval.
A copy of the press release issued on March 5, 2014 discussing the Fletcher settlement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
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Exhibit No.
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Description
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99.1
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Press Release, dated March 5, 2014
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| UNITED COMMUNITY BANKS, INC. | ||
| By: | /s/ Rex S. Schuette | |
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Rex S. Schuette
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Executive Vice President and
Chief Financial Officer
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Exhibit No.
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Description
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99.1
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Press Release, dated March 5, 2014
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EXHIBIT 99.1
For Immediate Release
For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
Rex_Schuette@ucbi.com
UNITED COMMUNITY BANKS, INC. REPORTS
WARRANT PURCHASE AND SETTLEMENT OF POTENTIAL CLAIMS
BLAIRSVILLE, GA - March 5, 2014 - United Community Banks, Inc. (NASDAQ: UCBI) and its subsidiary United Community Bank (together “United”) today reported a settlement agreement with the Chapter 11 Trustee for Fletcher International, Ltd. (“Fletcher”) pursuant to which United will purchase the outstanding warrant to purchase United’s common stock previously issued to Fletcher and settle any and all claims that could be asserted by Fletcher. The settlement agreement is subject to bankruptcy court approval.
As a result of the Trustee’s efforts to liquidate the Fletcher bankruptcy estate’s assets, United and Fletcher entered into the settlement agreement pursuant to which United has agreed to deliver 640,000 shares of its common stock and cash that, together with the common stock, will have a combined fair value of $12 million for the purchase of the Fletcher warrant and release of all claims by Fletcher. The value of United’s common stock to be issued approximates the current fair value of the Fletcher warrant and therefore the transaction will be accounted for as an exchange of equity instruments with no impact on United’s current earnings. United expects to fund the settlement 15 days following the court’s approval, and the final cash payment due to Fletcher will be an amount equal to the difference between the value of United’s common stock on such date and $12 million, which was previously reserved for at the time of the 2013 settlement with FILB Co-Investments LLC for potential claims that Fletcher might make against United, which are the subject of this settlement. Therefore, no current earnings impact is expected as a result of the settlement.
“With this settlement, we have resolved all claims from the transactions between United and Fletcher for a small amount in excess of the current fair value of the Fletcher warrant,” stated Jimmy Tallent, president and chief executive officer of United. “By purchasing the Fletcher warrant now, which has significant value due to the five years remaining before expiration, we minimize future dilution to shareholders that could result if the warrant remained outstanding. The additional cash to be transferred has been reserved for by United, and the impact of issuing additional shares will be minimal to United’s future earnings and tangible book value per share.”
About United Community Banks, Inc.
United Community Banks, Inc. is the third-largest Georgia-based bank holding company. Based in Blairsville, the company has assets of $7.4 billion and operates 102 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina, east Tennessee and western South Carolina. United specializes in personalized community banking services for individuals and small- to mid-size businesses, and also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United’s common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at United’s website at www.ucbi.com.
Safe Harbor
This news release contains forward-looking statements, as defined by federal securities laws, including statements about United’s financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to United’s filings with the Securities and Exchange Commission including its 2013 Annual Report on Form 10-K under the sections entitled “Forward-Looking Statements” and “Risk Factors.” Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.