Resale of Preferred issued pursuant to the Small Business Lending Fund

First Bancorp/NC Form S-3 on 9/30/2011 (SEC file no. 333-177096)
First PacTrust Bancorp, Inc. Form S-3 on 9/29/11 (file no. 333-177055)
Horizon Bancorp Form S-3 on 9/26/11 (file no. 333-177007)

The Treasury Department is the initial selling securityholder of senior non-cumulative perpetual preferred shares recently registered by issuers that have participated in the Small Business Lending Fund (SBLF).  Enacted into law as part of the Small Business Jobs Act of 2010, the SBLF is a $30 billion fund that encourages lending to small businesses by providing capital to qualified community banks with assets of less than $10 billion.  By press release dated September 28, the Treasury Department states that the final wave of funding through the SBLF has brought the total funding for the program to more than $4 billion going to 332 banks across the country. 

First Bancorp, a bank holding company headquartered in Troy, North Carolina, received an investment of $63.5 million in the company’s preferred stock on September 1.  The initial dividend rate on the preferred stock was 5% and can fluctuate on a quarterly basis during the first 10 quarters during which the  preferred stock is outstanding, based upon changes in the amount of the issuer's “Qualified Small Business Lending" as compared to a baseline level.  The First Bancorp preferred stock qualifies as Tier 1 capital, is non-voting except in limited circumstances and may be redeemed at any time at the company’s option. 
 
The issuances of the preferred stock were completed in private placements to Treasury exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.  First Bancorp filed the corresponding securities purchase agreement on Form 8-K dated September 6.  First PacTrust Bancorp ($32 million) and Horizon Bancorp ($12.5 million) filed their securities purchase agreements with the Secretary of Treasury on Form 8-Ks dated August 30 and August 26, respectively.

Registrant to Offer IPO Shares by Modified Dutch Auction

WhiteGlove Health, Inc., which on September 16 filed Amendment No 9 to its Form S-1, would be the first issuer to use the “OpenIPO” distribution method since 2007.  “OpenIPO” is WR Hambrecht + Co.’s trademarked name for an auction-based approach to the determination of public offering price and share allocation in which all investors, including company insiders, have an equal opportunity to receive an allocation of shares at the same price.  The investment bank was an underwriter in the eleven auction method IPOs that have closed since 2005.

For issuers using "OpenIPO", the underwriters solicit bids from potential investors that specify both the price and the number of securities the bidder wishes to purchase.  Prospective investors must open a brokerage account with one of the underwriters and deposit money into it.  These funds back the bids made in the auction.  The auction begins as soon as a preliminary prospectus is available and closes after the registration is declared effective. At any point within that window, bids can be canceled or modified and investors can make multiple bids at multiple prices.

At the close of the auction, the underwriters determine a “clearing price,” or the highest price at which all offered shares can be sold.  Once a clearing price is set, the issuer and the underwriters establish the public offering price.  The public offering price may be less than, but cannot exceed, the clearing price.  All of an investor’s bids at or above the clearing price will be considered and cumulated at the close of the auction.  The public offering price determines the allocation of shares to potential investors, with all valid bids submitted at or above the public offering price receiving a pro rata portion of the shares bid for.  Each of an investor’s successful bids will be treated separately for purposes of allocation and rounding of lots to multiples of 100 or 1,000 shares.

Benihana Inc. to Resubmit Reclassification Proposal

Benihana's special meeting proposal to simplify its capital structure by reclassifying each Class A common share into one share of common stock (previously reported in this space on June 10) did not receive the required approval by a majority of the outstanding common shares on September 12.  All other classes of stock voted a majority of shares outstanding in favor of the proposal.  The reclassification proposal required the higher burden of not just a majority of shares voting, but a majority of all outstanding common shares. 

Benihana of Tokyo, Inc. ("BOT"), the company's largest shareholder owning approximately 36.8% of the common shares and 26.8% of the voting power, expressed concerns about the reclassification proposal in a letter to the Benihana Inc. board of directors that is included as an exhibit to the Schedule 13D filed June 22 (SEC file no. 005-48717).  On August 5, BOT filed a Proxy Statement on Form DEFC14A to solicit votes against the proposed reclassification, stating it "would benefit certain of the Company’s insiders...while diluting and disenfranchising the vast majority" of the common stockholders.

In a press release filed by Benihana with a Form 8-K on September 12, the company indicated that it would re-file an S-4 Registration Statement to enable stockholders to vote again on the reclassification proposal as soon as possible.  Regarding such vote, the company said that it has been informed by BFC Financial Corporation that it intends to convert additional shares of its Series B preferred stock into common stock prior to the new record date to help obtain shareholder approval.  The new Form S-4 was filed on September 14, file no. 333-176842.