Bank company plans reorganization, bankruptcy filing
The holding company for a Madison-based bank with two branches in Janesville has raised $175 million to recapitalize itself as it moves through a bankruptcy that will not affect local operations.
Anchor BanCorp Wisconsin said Tuesday that it has definitive stock purchase agreements with a number of institutional and other private investors as part of a $175 million recapitalization.
In addition, the holding company said it has filed a voluntary Chapter 11 bankruptcy petition that would allow it to implement a plan of reorganization for itself and the recapitalization of its wholly owned subsidiary, AnchorBank.
AnchorBank has 55 offices in Wisconsin, including branches at 2215 Holiday Drive and 100 W. Racine St. in Janesville. The bank employs 11 at its Holiday Drive branch and six at the Racine Street branch.
It also has a branch in Monroe and a lending-only operation in Lake Geneva.
Chris Bauer, AnchorBank's president and chief executive officer, said the reorganization filing includes only Anchor BanCorp, which will allow the bank to remain outside of bankruptcy and to continue normal operations.
“It is important for our customers, employees and the community to know that AnchorBank … is not a part of the Chapter 11 process,” Bauer said in a news release. “It will be business as usual at the bank.
“Our customers will continue to work with the same employees, our leadership team remains in place, committed to AnchorBank and its success, and all customer deposits remain safe and insured to the fullest extent possible.”
Bauer said there would be no changes in employment or leadership at AnchorBank.
Bauer said the plan already has received the support of its major creditors—including the U.S. Treasury, which in 2009 gave Anchor BanCorp Wisconsin a $110 million loan under its Troubled Asset Relief Program. Anchor BanCorp has not repaid the principle or unpaid dividends that now total $139 million, according to the Milwaukee Journal-Sentinel.
About the same time, Anchor BanCorp had $116.3 million in debt from a group of lenders led by U.S. Bank—money Anchor had borrowed to acquire another Wisconsin bank in what turned out to be a poorly timed expansion shortly before the economic downturn occurred, the newspaper reported.
Both of those massive debts would be resolved in bankruptcy court, Bauer said. The government would wipe out Anchor BanCorp's debt in exchange for about $6 million in new common stock that the Treasury Department would then sell.
Bauer said the bank group would take $49 million in cash to absolve Anchor BanCorp of its principle and interest totaling $183 million.
The investors will own nearly 97 percent of Anchor BanCorp, with no individual owning more than 9.9 percent.
Current shareholders will lose their stock and its significantly reduced value. Traded on the OTC Market, the stock closed at nearly $32 per share in June 2005. At the end of 2007, the stock traded at $25; a year later, it closed at $2.02.
Anchor BanCorp's stock closed Monday at 42 cents.
Bauer said the reorganization should be complete in 45 to 90 days.
“Regulators, investors and the major parties involved have now agreed to a publicized course of action, and it is clear that AnchorBank will be able to continue its long tradition of serving their customers and the communities in Wisconsin,” said Rose Oswald Poels, president of the Wisconsin Bankers Association. “Despite the highly complex situation—the filing alone is over 450 pages long—the process Anchor BanCorp is going through will be expedited.”
“… The relative brevity of the process is going to be beneficial in the long-term not only to the institution but also to the local and state economy and the industry as a whole.”