The deadline is almost here. Financial institutions that are S-corporations only have until February 13, 2009 to submit an application to participate in the Treasury Department's Capital Purchase Program.
Many potential applicants have been hesitant to apply as rumors surrounding additional terms and conditions regarding executive compensation limits continued to circulate.
In light of the fact that the Administration today announced additional long-anticipated executive compensation guidelines and in doing so made clear that the new guidelines apply going forward for NEW capital access programs and cases involving "exceptional assistance"( such as the AIG investment and the supplemental B of A and Citi assistance) and not to existing programs (such as the Capital Purchase Program), more S-corps may indeed move forward with applying.
Keep in mind: even if preliminary approval notice is given to an institution, an institution does not have to complete the transaction and confidentiality will be maintained until such time as a transaction is actually consummated. Not applying closes the door to this potentially important capital augmentation option while applying keeps an institution's options open. This important consideration should be kept in mind as institutions take another look at the Capital Purchase Program.
For questions on the Capital Purchase Program, contact Allyn Dixon at 515.246.4520 or at adixon@dickinsonlaw.com.
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