Republic First Bancorp in Philadelphia has reached a truce with an activist investor by involving them in a planned capital raise and reconstituting its board.
The $6.2 billion-asset Republic said in a press release that George Norcross III, Gregory Braca and Philip Norcross will invest $35 million in the company. Republic will raise at least $40 million of additional capital from other investors.
Republic said it expects to use the proceeds to strengthen its financial position and improve its operations. Most of the company’s existing directors will step down as part of the arrangement.
The Norcross-Braca group will receive two board seats, and the additional investors will also be allowed to appoint two directors. President and CEO Thomas Geisel and four independent directors – two existing and two new ones – will round out the nine-person board.
The Norcross-Braca group will also have the right to appoint two non-voting observers to the board. The group also agreed to dismiss all litigation against Republic and cease its proxy solicitation efforts.
Republic will also pay certain fees and expenses incurred by the Norcross-Braca group and assume certain investment banking and legal expenses.
“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,” Geisel said in the release.
The agreement puts to rest a two-year battle that began when the Norcross-Braca group began sparring with former CEO Vernon Hill Jr. over the company’s direction. It continued after Hill’s departure, with the investors pushing to buy the bank and making one of its members the CEO.
The Norcross-Braca group filed litigation and in June urged Geisel to resign.
The capital raise is much smaller than the $125 million the company tried to bring in earlier this year. That raise was scrapped when Republic was unable to secure enough investors.
Squire Patton Boggs and Vinson & Elkins advised Republic. Sullivan & Cromwell and Ballard Spahr advised the Norcross-Braca group.