Newspaper article THE JOURNAL RECORD

Banks of Mid-America Senior Debt Rating Cut / by Standard & Poors

Newspaper article THE JOURNAL RECORD

Banks of Mid-America Senior Debt Rating Cut / by Standard & Poors

Article excerpt

The rating for Banks Of Mid-America Inc. senior debt was lowered Tuesday to CCC- from B- by Standard & Poor's Corp.

"There's a likelihood of non-repayment of principal," said Nancy Stroker, assistant vice president of Standard & Poor's, when explaining why the senior debt rating dropped three notches.

The senior debt had been placed on Standard & Poor's "CreditWatch with developing implications" on May 31, Stroker said, because the bank holding company's board of directors was considering a recapitalization proposal.

On June 14, the board authorized Banks of Mid-America management to strengthen the capital based by locating $60 million in new capital through the sale of common stock to current shareholders and reclassifying preferred stock as common stock.

The recapitalization plan also calls for settlement of the holding company's long-term debt at a discount or a renegotiation of terms. Banks of Mid-America is the parent of two of the four largest banks in the state: Liberty National Bank & Trust Co. of Oklahoma City with assets of $1.5 billion, and First National Bank & Trust Co. of Tulsa with assets of $833 million.

"This lower rate of the company's 10 3/4 percent notes reflects the plan to recapitalize," said Raymond H. Hefner Jr., chairman of the executive committee of the holding company.

The first principal payment on the 10 3/4 notes, with a value of between $41 million and $42 million, is due in October, Hefner said. The notes were acquired when Liberty and First National were merged in the holding company in 1984, he said.

"Settlement of the 10 3/4 notes on terms other than originally proposed at the time issued is an important part of the Oklahoma plan," Hefner said.

The Oklahoma plan would seek investors to support the holding company's recapitalization by subscribing to any under-subscribed rights to purchase the stock, Hefner said.

The plan relies on Oklahoma investors or investors with strong Oklahoma connections, possibly including Amarillo oilman T. …

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