Charlottesville, Va.-based Blue Ridge Bankshares Inc. completed a private placement of its common stock and preferred stock for gross proceeds of $150 million.
Blue Ridge plans to use the capital to propel its near-term strategic initiatives. These initiatives include repositioning business lines, supporting organic growth and enhancing the core community bank's capital levels, including complying with the capital ratios set forth in the consent order issued by the Office of the Comptroller of the Currency to the company's subsidiary, Blue Ridge Bank NA.
The private placement supersedes and replaces the previously announced $150 million sale of Blue Ridge common stock, for which all closing conditions were not satisfied.
Blue Ridge believes it had nearly satisfied those conditions. However, the company "received a shareholder inquiry that has raised questions about how votes were tabulated by an outside party on the articles amendment proposal at the shareholders meeting that made it difficult to move forward in a timely fashion, so we felt the best path was to adjust the offering structure," President and CEO G. William Beale said in a news release.
Under the securities purchase agreements, Blue Ridge issued 3.4 million new common shares for $2.50 per share, 14,150 convertible series B or series C preferred shares, and 7,383 warrants to purchase convertible series B or series C preferred shares. Each convertible series B and series C preferred share represents the equivalent of 4,000 Blue Ridge common shares.
Upon receipt of shareholder approvals for the issuance of common shares in the private placement in excess of 20% of the company's outstanding common shares, including upon conversion of the preferred stock, and increase in authorized common shares to 150 million from 50 million, all the series B preferred shares will convert into common shares and the series B preferred stock warrants will convert into warrants to acquire common shares.
Assuming the conversion of all series B preferred shares into common shares and accounting for the common-equivalent value of the series C preferred stock, Blue Ridge would have issued 60 million common and common equivalent shares at a $2.50 per-share price and would have about 29.5 million common stock warrants outstanding with a strike price of $2.50 per share. The terms of the transaction represent the same infusion of common equity capital as contemplated by the previous transaction.
The private placement was led by private investor Kenneth Lehman, with participation from Castle Creek Capital Partners VIII LP, other new and existing institutional investors and certain Blue Ridge directors and officers.
With the completion of the private placement, Blue Ridge expects to add up to three investor-appointed representatives to the board of the company and Blue Ridge Bank, subject to regulatory approval. The total Blue Ridge board would be reduced to 13 members at the conclusion of the company's 2024 annual meeting of shareholders.
Piper Sandler & Co. acted as the sole placement agent for the private placement. Williams Mullen served as legal counsel to Blue Ridge, and Troutman Pepper Hamilton Sanders LLP served as legal counsel to the placement agent. Fenimore Kay Harrison LLP served as legal counsel to Lehman, and Sidley Austin LLP served as legal counsel to Castle Creek.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.