Republic First Bancorp, based in Philadelphia, reached an agreement with the Norcross Braca Group for a multi-million-dollar investment in the bank and changes to the board.
Under the terms of the deal, the Norcross Braca Group will make a new investment of at least $35 million in Republic First and then the bank will raise at least $40 million of additional capital from third-party investors. The bank anticipates that the proceeds of the capital raise will be used to strengthen Republic First’s financial position and improve its operations.
In addition, the deal calls for a reconstitution of Republic First’s board of directors along with the departure of a majority of legacy directors. Upon consummation of the capital raise, the bank’s board would consist of nine members. This would include two directors designated by the Norcross Braca Group, two candidates put forth by the additional investors, two new independent directors, the company’s CEO, and two legacy independent directors.
In the interim, with the execution of a definitive agreement for the capital raise, the Norcross Braca Group will have the right to appoint two non-voting observers to the board.
“In addition to strengthening our balance sheet, we anticipate that this additional capital will provide greater flexibility to invest in the business and deliver extraordinary service to our loyal customer base and depositors. With this announcement, we plan to work with the Norcross Braca Group to put Republic on the best footing possible to enhance value for all shareholders. We would like to thank the Norcross Braca Group for their constructive engagement in getting to this point and appreciate the value they see in Republic,” Thomas Geisel, president and CEO of Republic, said.
Further, upon the execution of a definitive agreement for the capital raise, the Norcross Braca Group will dismiss all litigation against Republic First and cease its proxy solicitation efforts. Also, at that time, Republic First will pay certain fees and expenses of the Norcross Braca Group and assume certain investment banking and legal expenses.
“As significant Republic shareholders, we believe in the company’s potential and are excited about being part of its next chapter. We appreciate the board’s engagement throughout this process and look forward to working together. Ultimately, we share a common goal: helping the Company deliver outstanding service to its customers and depositors, investing in its communities and employees and improving value for shareholders,” George Norcross III said.
The transaction is subject to customary closing conditions, including shareholder and regulatory approvals.
Squire Patton Boggs (US) and Vinson & Elkins are serving as legal advisors for Republic First. Sullivan & Cromwell and Ballard Spahr are serving as legal advisors to the Norcross Braca Group.