Bank of America 2013 Annual Report Download - page 219

Bank of America 2013 217
In 2013, the Corporation entered into various agreements with
certain Trust Securities holders pursuant to which the Corporation
paid $933 million in cash in exchange for $934 million aggregate
liquidation amount of previously issued Trust Securities. Upon the
exchange, the Corporation immediately surrendered the Trust
Securities to the unconsolidated Trusts for cancellation, resulting
in the cancellation of an equal amount of junior subordinated notes
that had a carrying value of $934 million, resulting in an
insignificant gain.
In 2012, as described in Note 13 – Shareholders’ Equity, the
Corporation entered into separate agreements with certain Trust
Securities holders pursuant to which the Corporation issued 19
million shares of common stock valued at $159 million and paid
$9.4 billion in cash in exchange for $9.8 billion aggregate
liquidation amount of previously issued Trust Securities. Upon the
exchange, the Corporation immediately surrendered the Trust
Securities to the unconsolidated Trusts for cancellation, resulting
in the cancellation of an equal amount of junior subordinated notes
that had a carrying value of $9.9 billion, resulting in a gain on
extinguishment of debt of $282 million.
During 2012, the Corporation remarketed the remaining
outstanding $141 million in aggregate principal amount of its BAC
Capital Trust XIII Floating-Rate Preferred Hybrid Income Term
Securities (HITS) and the remaining outstanding $493 million in
aggregate principal amount of its BAC Capital Trust XIV Fixed-to-
Floating Rate Preferred HITS. The Corporation repurchased and
retired all of the remarketable notes in the remarketings. The net
proceeds from the remarketing of the BAC Capital Trust XIII
Floating-Rate Preferred HITS were used to satisfy the obligations
of Trust XIII under a stock purchase contract agreement, pursuant
to which Trust XIII was obligated to purchase, and the Corporation
was obligated to sell, 1,409 shares of the Corporation’s Series F
Floating Rate Non-Cumulative Preferred Stock (Series F Preferred
Stock). The net proceeds from the remarketing of the BAC Capital
Trust XIV Fixed-to-Floating Rate Preferred HITS were used to satisfy
the obligations of Trust XIV under a stock purchase contract
agreement, pursuant to which Trust XIV was obligated to purchase,
and the Corporation was obligated to sell, 4,926 shares of the
Corporation’s Series G Adjustable Rate Non-Cumulative Preferred
Stock (Series G Preferred Stock). Following the remarketing of the
notes and the subsequent purchase of the Corporation’s preferred
stock under the stock purchase contracts, the preferred stock
constitutes the sole asset of the applicable trust.
On May 25, 2012, the Corporation completed the repurchase
of $134 million aggregate liquidation amount of capital securities
of BAC Capital Trust VI, pursuant to a previously announced tender
offer for such securities, and the related cancellation and
retirement of the underlying 5.625% Junior Subordinated Notes,
due 2035 of the Corporation issued to and held by BAC Capital
Trust VI. As a result of this repurchase of capital securities and
the related cancellation and retirement of the underlying 5.625%
Junior Subordinated Notes, the series of covered debt benefiting
from the Corporation’s replacement capital covenant, executed
February 16, 2007 in connection with the issuance by BAC Capital
Trust XIV of its 5.63% Fixed-to-Floating Rate Preferred Hybrid
Income Term Securities (the Replacement Capital Covenant), was
redesignated. Effective as of May 25, 2012, the 5.625% Junior
Subordinated Notes ceased being the covered debt under the
Replacement Capital Covenant. Also effective as of May 25, 2012,
the Corporation’s 6.875% Junior Subordinated Notes, due 2055
underlying the capital securities of BAC Capital Trust XII, became
the covered debt with respect to and in accordance with the terms
of the Replacement Capital Covenant.