SAN FRANCISCO, July 2 /PRNewswire-FirstCall/ -- The Charles Schwab
Corporation today announced its plan to return approximately $3.5 billion
in capital to stockholders and create a more efficient and cost-effective
capital structure. This plan follows the completion, on July 1, 2007, of
the sale of U.S. Trust Corporation, which generated $2.7 billion of
after-tax proceeds. The plan includes the following components:
-- A special cash dividend of $1.00 per common share, which will return
approximately $1.2 billion to stockholders. The special dividend is
payable on August 24, 2007, to stockholders of record at the close of
business on July 24, 2007.
-- A $2.3 billion share repurchase through a modified "Dutch Auction"
Tender Offer and a separate Stock Purchase Agreement with Chairman and
CEO Charles R. Schwab, the company's largest stockholder. The Stock
Purchase Agreement will maintain Mr. Schwab's beneficial ownership of
the company at its current level of approximately 18 percent.
-- Debt offerings of up to $750 million consisting of a combination of
senior notes and hybrid capital securities.
"The Board of Directors and I believe our plan represents a balanced
approach to refining the company's capital structure on behalf of our
stockholders," said Mr. Schwab. "We are focused on sustaining a strong,
flexible balance sheet that enables the company to continue funding the
growth of its core businesses."
Chief Financial Officer Joe Martinetto said, "We have conducted a
thorough review of alternatives for deploying both the proceeds from the
sale of U.S. Trust and our other available financial resources, and we
believe this plan is an efficient means of achieving an appropriate level
and mix of capital for Schwab."
Separately, the Board also declared a regular quarterly cash dividend
today of $0.05 per common share. The dividend is payable on August 24,
2007, to stockholders of record at the close of business on July 24, 2007.
$2.3 Billion Share Repurchase Program
The Tender Offer, which will commence tomorrow, July 3, 2007, will be
for up to 84 million shares, representing approximately 7% of the company's
outstanding common stock, with the right to purchase up to an additional 25
million shares, subject to certain limitations and legal requirements.
On the terms and subject to the conditions of the Tender Offer,
stockholders will have the opportunity to tender some or all of their
shares at a price per share not less than $19.50 or more than $22.50. The
Tender Offer is expected to expire at midnight Eastern time on July 31,
2007, unless extended. The modified "Dutch Auction" structure will allow
stockholders to indicate how many shares and at what price within the
specified range they wish to tender. Based on the number of shares tendered
and the prices specified by the tendering stockholders, the company will
determine the lowest price per share within the range that will enable it
to purchase up to 84 million shares, or such lesser number of shares as are
properly tendered and not properly withdrawn. Instructions and an
explanation of the terms and conditions of the Tender Offer are contained
in the offer to purchase and related materials that will be mailed to
stockholders. The tender offer is not contingent upon the receipt of
financing or upon any minimum number of shares being tendered, but is
subject to certain terms and conditions as described in the offer to
purchase and related documents.
Under a Stock Purchase Agreement executed today, Mr. Schwab has agreed
not to participate in the Tender Offer but, together with certain
stockholders whose shares Mr. Schwab is deemed to beneficially own, will
sell up to 18 million shares to the company after completion of the Tender
Offer. The number of shares to be repurchased will be calculated to result
in Mr. Schwab maintaining the same beneficial ownership interest in the
company's outstanding common stock that he currently has (approximately 18
percent) and does not take into consideration Mr. Schwab's outstanding
options to acquire stock. The purchase price under the Stock Purchase
Agreement will be the same price per share as is determined and paid in the
Tender Offer.
This Tender Offer is in addition to the $446 million remaining under
the existing Board stock repurchase authorization. The company has
repurchased 12.7 million shares for $251 million during the second quarter
2007; year-to- date, it has repurchased 33.4 million shares for $642
million.
Important Information Regarding Tender Offer
This announcement is for informational purposes only and does not
constitute an offer to purchase or a solicitation of an offer to sell
shares of the company's Common Stock. The company has not commenced the
Tender Offer described in this announcement. The Tender Offer will be made
only pursuant to the offer to purchase, letter of transmittal and related
documents that the company will be distributing shortly to its stockholders
and filing with the Securities and Exchange Commission (which filing is
expected to occur on Tuesday). Stockholders should read and evaluate
carefully the offer to purchase, letter of transmittal and related
documents when they become available, as they will contain important
information, including the various terms of, and conditions to, the Tender
Offer. Following the commencement of the Tender Offer, stockholders may
obtain a free copy of the Tender Offer statement on Schedule TO, the offer
to purchase, letter of transmittal and other documents that the company
will be filing shortly with the Securities and Exchange Commission at the
Commission's website at http://www.sec.gov, or from D.F. King & Co, Inc.,
the company's information agent for the Tender Offer, by directing a
request to D.F. King & Co., Inc., 48 Wall Street, New York, NY 10005 or
calling toll-free at 1-800 659-6590. Copies of these materials will also be
mailed to stockholders of record following the commencement of the Tender
Offer.
Neither the company nor the Board, the dealer manager, the information
agent or the depositary makes any recommendation to the company's
stockholders as to whether to tender or refrain from tendering their shares
in the tender offer or as to the price within the specified price range at
which they may choose to tender their shares. Stockholders are urged to
read and evaluate carefully the information contained in the offer to
purchase, letter of transmittal and related documents prior to making any
decision with respect to the tender offer.
Important Information Regarding Debt Issuance
This is not an offer to sell or a solicitation of an offer to buy the
senior notes or hybrid capital securities. The proposed offer and sale of
the senior notes and hybrid capital securities may be made only pursuant to
supplements to prospectuses contained in shelf registrations declared
effective by the Securities and Exchange Commission. The terms of the
senior notes and hybrid capital securities are subject to the preparation,
negotiation and completion of definitive documents, and the timing and
amount of these offerings may be affected by market conditions, including
the demand for new corporate debt issues. The specific terms of the senior
notes and hybrid capital securities will be described in one or more
prospectus supplements or pricing supplements to be filed with the
Securities and Exchange Commission and may be obtained free of charge from
the Securities and Exchange Commission's website at http://www.sec.gov.
About Charles Schwab
The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of
financial services, with more than 300 offices and 6.9 million client
brokerage accounts, 1.1 million corporate retirement plan participants,
165,000 banking accounts, and $1.4 trillion in client assets. Through its
operating subsidiaries, the company provides a full range of securities
brokerage, banking, money management and financial advisory services to
individual investors and independent investment advisors. Its broker-dealer
subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org),
and affiliates offer a complete range of investment services and products
including an extensive selection of mutual funds; financial planning and
investment advice; retirement plan and equity compensation plan services;
referrals to independent fee-based investment advisors; and custodial,
operational and trading support for independent, fee-based investment
advisors through its Schwab Institutional division. The Charles Schwab
Bank, N.A. (member FDIC) provides banking and mortgage services and
products. CyberTrader(R), Inc. (member SIPC, http://www.sipc.org) is an
electronic trading technology and brokerage firm providing services to
highly active, online traders. More information is available at
http://www.schwab.com.
SOURCE Charles Schwab
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Related links:
http://www.schwab.com/
CONTACT:
Media, Greg Gable, +1-415-636-5847, or
Investors-Analysts, Rich Fowler, +1-415-636-9869, both of Charles
Schwab
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