TORONTO, March 2 /CNW/ - CIBC (CM: TSX;NYSE) announced today that it has acquired a minority interest in Bermuda-based The Bank of N.T. Butterfield & Son Limited.
Under terms of the transaction, CIBC has invested US$150 million as part of a US$550 million recapitalization of Butterfield. The Carlyle Group and several other institutional investors have invested the remaining US$400 million to complete the recapitalization. Butterfield's public shareholders will have the right to participate in the recapitalization by subscribing for additional common shares under a US$130 million rights offering, which could reduce the size of CIBC's investment by up to US$25 million. In addition, CIBC has provided Butterfield with a commitment letter for a senior secured credit facility for up to US$500 million.
As a result of today's investment, CIBC owns 22.5 per cent of Butterfield's equity in the form of common shares and convertible voting preference shares, and will nominate two of 12 directors on Butterfield's Board of Directors. If at least US$25 million of additional common shares are issued under Butterfield's rights offering, CIBC's pro forma ownership will be reduced to 18.8 per cent of Butterfield.
"CIBC has demonstrated an ability to expand through minority investments, partnerships and joint ventures," said CIBC President and Chief Executive Officer Gerald T. McCaughey. "This transaction fits well within our ongoing growth strategy for CIBC."
"Butterfield has strong market positions in Bermuda and the Cayman Islands as well as operations in seven other jurisdictions," Mr. McCaughey added. "As a result of the recapitalization, we and our partner investors believe that Butterfield will continue to be a leading financial institution for its clients and will provide continued value for its shareholders."
CIBC has also invested US$26 million indirectly in Butterfield through a private equity fund sponsored by The Carlyle Group. CIBC previously committed US$150 million to the Carlyle fund to invest in financial services transactions.
CIBC Wholesale Banking and Bank of America Merrill Lynch acted as CIBC's financial advisors and Mayer Brown LLP and Appleby Global acted as CIBC's legal advisors on this transaction.
Established in 1858, Butterfield is the largest independent bank in Bermuda. With assets of US$9.6 billion, Butterfield offers a full range of banking services in Bermuda, Barbados and the Cayman Islands, encompassing retail and corporate banking and treasury activities. The group also provides private banking, asset management and personal trust services from its headquarters in Bermuda and subsidiary offices in The Bahamas, the Cayman Islands, Guernsey, Hong Kong, Malta, Switzerland and the United Kingdom. Butterfield also provides services to corporate and institutional clients from offices in Bermuda, The Bahamas, the Cayman Islands and Guernsey, which include asset management and corporate trust services.
Butterfield is a publicly traded corporation with shares listed on the Bermuda and Cayman Islands stock exchanges. (symbol: NTB BH). Butterfield has announced that, on a pro-forma basis, as at Dec. 31, 2009, and adjusting for a further potential loss in the range of US$150 million to US$175 million in the first quarter of 2010 related to the investment portfolio restructuring, the US$550 million recapitalization would have raised Butterfield's Tier 1 capital ratio to 13.5% and its total capital ratio to 18.7%.
CIBC is a leading Canadian-based global financial institution. Through our two main operating groups, CIBC Retail Markets and Wholesale Banking, CIBC provides a full range of financial service products and services to almost 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. CIBC is amongst the best capitalized banks in North America with a Tier 1 ratio at Jan. 31, 2010 of 13.0%. This transaction will not have a material impact on CIBC's capital ratios.
CIBC has an extensive retail, wealth management and corporate banking presence in the Caribbean under the FirstCaribbean International Bank brand. FirstCaribbean began as a partnership with Barclays Bank PLC and today is the largest, regionally-listed bank in the eastern Caribbean with assets of US$10.8 billion and a market capitalization of US$2.1 billion.
