Bank of America 2013 Annual Report Download - page 233

Bank of America 2013 231
Additionally, as a part of the Exchange Agreements, a portion
of the Series L 7.25% Non-Cumulative Perpetual Convertible
Preferred Stock (Series L Preferred Stock) with an aggregate
liquidation preference and carrying value of $269 million was
exchanged for 20 million shares of the Corporation’s common
stock valued at $123 million and senior notes valued at $129
million. The $17 million difference between the carrying value of
the Series L Preferred Stock and the fair value of the consideration
issued to holders of the Series L Preferred Stock was reclassified
from preferred stock to common stock and additional paid-in
capital. Because the number of common shares issued to the
Series L Preferred Stock holders was in excess of the number of
common shares issuable pursuant to the original conversion
terms, the $220 million fair value of consideration transferred to
the Series L Preferred Stock holders in excess of the $32 million
fair value of securities issuable pursuant to the original conversion
terms was recorded as a non-cash preferred stock dividend. The
dividend did not impact total shareholders’ equity since it reduced
retained earnings and increased common stock and additional
paid-in capital by the same amount.
The Series T Preferred Stock issued as part of the Berkshire
investment has a liquidation value of $100,000 per share and
dividends on the Series T Preferred Stock accrue on the liquidation
value at a rate per annum of six percent but will be paid only when
and if declared by the Board out of legally available funds. Subject
to the approval of the Board of Governors of the Federal Reserve
System (Federal Reserve), the Series T Preferred Stock may be
redeemed by the Corporation at any time at a redemption price of
$105,000 per share plus any accrued, unpaid dividends. The
Series T Preferred Stock has no maturity date and ranks senior to
the outstanding common stock with respect to the payment of
dividends and distributions in liquidation. At any time when
dividends on the Series T Preferred Stock have not been paid in
full, the unpaid amounts will accrue dividends at a rate per annum
of eight percent and the Corporation will not be permitted to pay
dividends or other distributions on, or to repurchase, any
outstanding common stock or any of the Corporation’s outstanding
preferred stock of any series. Following payment in full of accrued
but unpaid dividends on the Series T Preferred Stock, the dividend
rate remains at eight percent per annum.