Details of the filing with the SEC

On Dec. 19, BancTrust filed a Form 8-K with the Securities and Exchange Commission, stating the company had “entered into a letter agreement with Capital Z Partners III, L.P. and Pine Brook Road Partners” as part of a planned capital raise. According to the SEC, a Form 8-K is “the ‘current report’ companies must file with the SEC to announce major events that shareholders should know about.”

A move by BancTrust to raise additional capital through new investors is considered a “major event.”

The filing also states the bank and investors have established a March 15 deadline to “sign and execute definitive documentation” confirming the agreement and investment. Some media reports say if the groups are not able to reach a deal by the deadline, BancTrust would then owe the investors a $1.75 million termination fee. This, Lamar said, is “not correct at all.”

“These groups are so keen upon doing that investment, that they asked the bank to sign an exclusivity agreement, and what it says is that we will not go out and try to find anybody in lieu of them to invest in the bank. We will not solicit offers to buy the bank …” Lamar said. “If we breach that agreement between now and March 15, we will then owe them a ‘break up’ fee of $1.75 million.”

“We are working diligently to finish this up. There are a lot of moving parts when you do something like this,” Lamar said. “I am hopeful the capital raise transaction will go through.”

Jahera said, while he doesn’t know too much about the two investment companies, he does know investing in BancTrust is the type of investment these firms usually target.

“This is their target market. Find a bank and infuse capital. Now, at some point, a company is going to hope for a good return on their investment,” Jahera said.

 

Reaction to the news

For Lamar, the biggest issue faced when media reports said the capital raise was an effort to position the bank for sale was the reaction from employees. He said the company spent time communicating with employees that this was simply an effort to seek investors, not seek buyers.

“Anytime a bank is sold, scores of employees lose their jobs,” Lamar said. “We met with the employees, company-wide, and let them know, let them understand, that this is an investment and not a sale of the bank — if the investment occurs.”

For a company that employs an estimated 488 in Alabama — 75 in Selma alone — it was important it found investors who had a similar community banking philosophy, Lamar said.

“This investment will do nothing to change the way we operate, our philosophy or anything else,” Lamar said.

“We’ve spent a good deal of time talking to different investors. I think it’s important you find someone who is congenial and thinks the way you do.”