ITEM 1.01. Entry into a Material Definitive Agreement.
The Merger Agreement
On February 27, 2022, First Horizon Corporation, a Tennessee corporation ("First
Horizon"), entered into an Agreement and Plan of Merger (the "Merger Agreement")
by and among First Horizon, The Toronto-Dominion Bank, a Canadian chartered bank
("TD"), TD Bank US Holding Company, a Delaware corporation and indirect, wholly
owned subsidiary of TD ("TD US Holding Company"), and Falcon Holdings
Acquisition Co., a Delaware corporation and direct, wholly owned subsidiary of
TD US Holding Company ("TD Merger Sub").
The Merger Agreement provides that, upon the terms and subject to the conditions
set forth therein, (i) First Horizon and TD Merger Sub will merge (the
"Merger"), with First Horizon continuing as the surviving entity in the merger,
and (ii) following the effective time of the Merger (the "Effective Time"), (x)
at the election of TD, TD US Holding Company and First Horizon may merge (the
"Second Step Merger"), with TD US Holding Company continuing as the surviving
entity in the merger. Following the completion of the Merger, at a time
determined by TD, First Horizon Bank, a Tennessee state-chartered bank and
wholly owned subsidiary of First Horizon ("First Horizon Bank"), and (y) TD
Bank, National Association, a national banking association and wholly owned
subsidiary of TD US Holding Company ("TD Bank") will merge (the "Bank Merger",
and together with the Merger and the Second Step Merger, the "Mergers"), with TD
Bank continuing as the surviving bank in the merger. The Merger Agreement was
unanimously approved and adopted by the board of directors of each of First
Horizon and TD.
Upon the terms and subject to the conditions set forth in the Merger Agreement,
at the Effective Time, each share of common stock, par value $0.625 per share,
of First Horizon ("First Horizon Common Stock") issued and outstanding
immediately prior to the Effective Time, other than certain shares held by First
Horizon and TD, will be converted into the right to receive $25.00 per share in
cash, without interest (the "Base Per Share Consideration"). If the Effective
Time occurs after November 27, 2022, the Base Per Share Consideration will
increase by $0.0017808 in cash per share of issued and outstanding First Horizon
Common Stock, other than certain shares held by First Horizon and TD, for each
day during the period commencing on, and including, November 27, 2022, and
ending on, and including, the day immediately prior to the closing of the Merger
(the "Additional Share Consideration" and, together with the Base Per Share
Consideration, the "Merger Consideration").
At the Effective Time, each outstanding share of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and
Series F Preferred Stock (each series as defined below) will remain issued and
outstanding. If TD elects to effect the Second Step Merger, at the effective
time of the Second Step Merger, (i) each issued and outstanding share of First
Horizon's 6.625% fixed-to-floating non-cumulative perpetual preferred stock,
Series B, par value $1.00 per share ("Series B Preferred Stock"), will be
automatically converted into a share of a newly created series of preferred
shares of TD US Holding Company having powers, preferences and special rights
that are not materially less favorable than the Series B Preferred Stock, (ii)
each issued and outstanding share of First Horizon's 6.60% fixed-to-floating
non-cumulative perpetual preferred stock, Series C, par value $1.00 per share
("Series C Preferred Stock"), will be automatically converted into a share of a
newly created series of preferred shares of TD US Holding Company having powers,
preferences and special rights that are not materially less favorable than the
Series C Preferred Stock, (iii) each issued and outstanding share of First
Horizon's 6.100% fixed-to-floating non-cumulative perpetual preferred stock,
Series D, par value $1.00 per share ("Series D Preferred Stock"), will be
automatically converted into a share of a newly created series of preferred
shares of TD US Holding Company having powers, preferences and special rights
that are identical to the powers, preferences and special rights of the Series D
Preferred Stock, (iv) each issued and outstanding share of First Horizon's
non-cumulative perpetual preferred stock, Series E, par value $1.00 per share
("Series E Preferred Stock"), will be automatically converted into a share of a
newly created series of preferred shares of TD US Holding Company having terms
that are not materially less favorable than those of the Series E Preferred
Stock; and (v) each issued and outstanding share of First Horizon's
non-cumulative perpetual preferred stock, Series F, par value $1.00 per share
("Series F Preferred Stock"), will be automatically converted into a share of a
newly created series of preferred shares of TD US Holding Company having terms
that are not materially less favorable than those of the Series F Preferred
Stock.
At the Effective Time, (i) (1) each outstanding equity award of First Horizon
that vests at the Effective Time in accordance with the terms and conditions
that were applicable to such award immediately prior to the Effective Time and
(2) each outstanding restricted stock unit award of First Horizon that is held
by a current or former non-employee director will be cancelled and entitle the
holder thereof to receive an amount in cash equal to the product of the number
of shares of First Horizon Common Stock subject to such equity award and the
Merger Consideration, (ii) each outstanding First Horizon stock
option will be cancelled and entitle the holder thereof to receive an amount in
cash equal to the product of the number of shares of First Horizon Common Stock
subject to such option and the excess, if any, of the Merger Consideration over
the exercise price per share of such option (with any options with an exercise
price per share that is greater than or equal to the Merger Consideration being
cancelled for no consideration) and (iii) all other First Horizon equity awards
will be converted into a corresponding award with respect to common shares of
TD, and as converted, will remain outstanding and subject to the same terms and
conditions as applied to the corresponding First Horizon equity award
immediately prior to the Effective Time (except that performance-based awards
will convert assuming target performance or the greater of target and actual
performance, as applicable, and will not be subject to future performance-based
vesting conditions). For purposes of the conversion in (iii) above, the number
of common shares of TD subject to the converted award will be based upon an
exchange ratio equal to the Merger Consideration divided by the average closing
price of common shares of TD for 10 trading days preceding the Effective Time.
The Merger Agreement contains representations and warranties from each of First
Horizon and TD. First Horizon has agreed to covenants, including, among others,
covenants relating to (i) the conduct of its business during the interim period
between the execution of the Merger Agreement and the Effective Time, (ii) its
obligations to call a meeting of its shareholders, to approve the Merger
. . .
ITEM 3.02. Unregistered Sales of Equity Securities.
On February 27, 2022, in connection with the execution of the Merger Agreement,
First Horizon and TD entered into a Securities Purchase Agreement (the
"Securities Purchase Agreement"). Pursuant to the Securities Purchase Agreement,
First Horizon issued and sold to TD, which is an accredited investor, as that
term is defined by Rule 501 of Regulation D under the Securities Act, 4,935.694
shares of Perpetual Convertible Preferred Stock, Series G (the "Series G
Preferred Stock") of First Horizon, in a private placement transaction for
$493,569.400.00.
At the Effective Time, each share of Series G Preferred Stock will be
automatically converted into shares of common stock of First Horizon, as the
surviving company in the Merger, as set forth in the Merger Agreement. In the
event the Merger Agreement is terminated, each share of Series G Preferred Stock
will be converted into 5,574.136 shares of First Horizon Common Stock (the
"Conversion Rate"), subject to the expiration or early termination of the
applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (and receipt of any other governmental approvals) to
the extent required with respect to any such conversion. If, however, the Merger
Agreement is terminated under certain circumstances relating to the failure to
receive regulatory approvals required to consummate the Mergers, then the
Conversion Rate will be 4,000 shares of First Horizon Common Stock. In no event
will the shares of Series G Preferred Stock be convertible into shares of First
Horizon Common Stock representing more than 4.9% of the total issued and
outstanding shares of First Horizon Common Stock (taking in account shares
resulting from such conversion).
From the date of the Merger Agreement through the Effective Time or, in the
event the Merger Agreement is terminated, until 45 days after termination, TD
may not transfer or sell the Series G Preferred Stock or the shares of Common
Stock into which the Series G Preferred Stock converts, except for sales or
transfers to any direct or indirect subsidiary of TD or to the extent necessary
to ensure TD does not hold more than 4.9% of the total issued and outstanding
shares of First Horizon Common Stock.
The information disclosed under Item 5.03 of this Current Report on 8-K is
incorporated herein by reference.
ITEM 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On February 28, 2022, First Horizon filed an Articles of Amendment (the
"Articles of Amendment") to its Restated Charter, as amended, with the Secretary
of State of the State of Tennessee, establishing the preferences, limitations
and relative rights of the Series G Preferred Stock.
The Articles of Amendment became effective upon filing, and a copy is filed as
Exhibit 3.1 herein and is incorporated herein by reference.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description of Exhibit
2.1 Agreement and Plan of Merger, dated as of February 27, 2022,
between First Horizon Corporation, The Toronto-Dominion Bank, TD Bank
US Holding Company and Falcon Holdings Acquisition Co. [conformed
copy] (incorporated by reference to Exhibit 2.1 to First Horizon
Corporation's Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 1, 2022)
3.1 Articles of Amendment of the Restated Charter of First Horizon
Corporation, related to the Series G Preferred Stock
Forward-Looking Statements
This communication contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act, and Section 21E of the Exchange Act, with respect to First
Horizon's beliefs, plans, goals, expectations, and estimates. Forward-looking
statements are not a representation of historical information, but instead
pertain to future operations, strategies, financial results or other
developments. The words "believe," "expect," "anticipate," "intend," "target",
"plan", "estimate," "should," "likely," "will," "going forward" and other
expressions that indicate future events and trends identify forward-looking
statements.
Forward-looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, operational, economic and
competitive uncertainties and contingencies, many of which are beyond the
control of First Horizon, and many of which, with respect to future business
decisions and actions, are subject to change and which could cause actual
results to differ materially from those contemplated or implied by
forward-looking statements or historical performance. Examples of uncertainties
and contingencies include factors previously disclosed in First Horizon's
reports filed with the SEC as well as the following factors, among others: the
occurrence of any event, change or other circumstances that could give rise to
the right of one or both of the parties to terminate the definitive merger
agreement between First Horizon and TD; the outcome of any legal proceedings
that may be instituted against First Horizon or TD, including potential
litigation that may be instituted against First Horizon or its directors or
officers related to the proposed transaction or the definitive merger agreement
between First Horizon and TD related to the proposed transaction; the timing and
completion of the transaction, including the possibility that the proposed
transaction will not close when expected or at all because required regulatory,
shareholder or other approvals are not received or other conditions to the
closing are not satisfied on a timely basis or at all, or are obtained subject
to conditions that are not anticipated; interloper risk? the risk that any
announcements relating to the proposed combination could have adverse effects on
the market price of the common stock of First Horizon? certain restrictions
during the pendency of the merger that may impact First Horizon's ability to
pursue certain business opportunities or strategic transactions; the possibility
that the transaction may be more expensive to complete than anticipated,
including as a result of unexpected factors or events? diversion of management's
attention from ongoing business operations and opportunities? reputational risk
and potential adverse reactions or changes to business or employee
relationships, including those resulting from the announcement or completion of
the transaction? First Horizon's success in executing its business plans and
strategies and managing the risks involved in the foregoing; currency and
interest rate fluctuations; exchange rates; success of hedging activities?
material adverse changes in economic and industry conditions, including the
availability of short and long-term financing; general competitive, economic,
political and market conditions; changes in asset quality and credit risk? the
inability to sustain revenue and earnings growth? inflation? customer borrowing,
repayment, investment and deposit practices? the impact, extent and timing of
technological changes? capital management activities? other actions of the Board
of Governors of the Federal Reserve System, the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the Tennessee Department of
Financial Institutions (if required) and other regulators, legislative and
regulatory actions and reforms; the pandemic created by the outbreak of COVID-19
and its variants, and resulting effects on economic conditions, restrictions
imposed by public health authorities or governments, fiscal and monetary policy
responses by governments and financial institutions, and disruptions to global
supply chains; and other factors that may affect future results of First
Horizon.
We caution that the foregoing list of important factors that may affect future
results is not exhaustive. Additional factors that could cause results to differ
materially from those contemplated by forward-looking statements can be found in
First Horizon's Annual Report on Form 10-K for the year ended December 31, 2021,
and in its subsequent Quarterly Reports on Form 10-Q filed with the SEC and
available in the "Investor Relations" section of First Horizon's website,
http://www.first horizon.com, under the heading "SEC Filings" and in other
documents First Horizon files with the SEC.
Important Other Information
In connection with the proposed transaction, First Horizon intends to file
relevant materials with the SEC, including a proxy statement on Schedule 14A.
This communication does not constitute an offer to sell or a solicitation of an
offer to buy any securities or a solicitation of any vote or approval.
SHAREHOLDERS OF FIRST HORIZON ARE URGED TO READ, WHEN AVAILABLE, ALL RELEVANT
DOCUMENTS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) FILED WITH THE
SEC, INCLUDING FIRST HORIZON'S PROXY STATEMENT, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT FIRST HORIZON AND THE PROPOSED TRANSACTION.
Investors and shareholders of First Horizon will be able to obtain a free copy
of the proxy statement as well as other relevant documents filed with the SEC
without charge at the SEC's website (http://www.sec.gov). Copies of the proxy
statement and the filings with the SEC that will be incorporated by reference in
the proxy statement can also be obtained, without charge, by directing a request
to Clyde A. Billings Jr., First Horizon Corporation, 165 Madison, Memphis, TN
38103, telephone (901) 523-4444.
Participants in the Solicitation
First Horizon and certain of its directors, executive officers and employees may
be deemed to be participants in the solicitation of proxies in respect of the
proposed transaction under the rules of the SEC. Information regarding First
Horizon's directors and executive officers is available in the proxy statement
for its 2021 annual meeting of shareholders, which was filed with the SEC on
March 15, 2021, and certain of its Current Reports on Form 8-K. Other
information regarding the participants in the solicitation of proxies in respect
of the proposed transaction and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in the proxy
statement and other relevant materials to be filed with the SEC. Free copies of
these documents, when available, may be obtained as described in the preceding
paragraph.
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