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Anchor BanCorp Recapitalizes; Files for Pre-packaged Chapter 11 Reorganization


Aug 15 - Anchor BanCorp Wisconsin Inc. (OTC Market: ABCW) has announced that the holding company has entered into definitive stock purchase agreements with a number of institutional and other private investors as part of a $175 million recapitalization of the institution. No new investor will own in excess of 9.9 percent of the common equity of the recapitalized holding company.

At the same time, in order to facilitate the recapitalization, the holding company has filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of Wisconsin to implement a "pre-packaged" plan of reorganization to restructure the holding company and recapitalize its wholly owned subsidiary, AnchorBank, fsb.

The plan has already received the consent of the holding company creditors necessary for approval of the plan, and has also received the consent of the holding company's sole preferred stockholder, the United States Department of the Treasury. As described above, Anchor BanCorp has already entered into binding subscriptions for $175 million in new common equity, which represents all the necessary equity financing to implement the plan and emerge as a recapitalized institution.

The reorganization filing includes only Anchor BanCorp, the holding company for the bank, allowing the bank to remain outside of bankruptcy and to continue normal operations. The bank operates 55 offices throughout Wisconsin. Operations at the bank will continue as usual throughout the reorganization process.

"It is important for our customers, employees and the community to know that AnchorBank, which operates separately from the holding company, is not a part of the Chapter 11 process. The Chapter 11 filing includes only the holding company and does not affect AnchorBank, its people, or its services," said Chris Bauer, AnchorBank president and CEO. "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 by the FDIC. As such, there will be no interruption of AnchorBank services and customer programs, and there will be no changes in employment or leadership within the bank."

Pursuant to the plan of reorganization, the holding company will discharge its senior secured credit facility with approximately $183 million in outstanding obligations for a cash payment of $49 million.

In addition, the holding company's TARP preferred securities with an aggregate liquidation preference and deferred dividends of approximately $139 million will be cancelled in exchange for new common equity that will represent approximately 3.3 percent of the pro forma equity of the reorganized holding company. The new equity investors will represent in the aggregate approximately 96.7 percent of the pro forma equity of the reorganized Holding Company. The shares of common stock of the holding company currently outstanding will be cancelled for no consideration pursuant to the plan of reorganization.

Consummation of the foregoing reorganization and recapitalization is subject to certain conditions, including bankruptcy court approval of the plan of reorganization, receipt of all required regulatory approvals and closing of the capital raise, including satisfaction of the conditions contained in the subscription agreements for the new common equity. As noted above, subscription agreements have already been executed with respect to the entire $175 million common equity raise. Subject to the foregoing conditions, the reorganization process is expected to be completed within 45-90 days.

Bauer continued: "This is an important and necessary step in the transformation and turnaround of the bank. Upon completion of this transaction, AnchorBank will have capital in excess of levels required by our regulators. This will position the bank for a return to profitability and growth."

The securities to be issued in the recapitalization transaction will not be registered under the Securities Act of 1933, as amended, or the securities laws of any state and may not be transferred, sold or otherwise disposed of except while a registration statement relating thereto is in effect under such act and applicable state securities laws or pursuant to an exemption from registration under such act or such laws.

About Anchor BanCorp Wisconsin Inc.
Anchor BanCorp Wisconsin Inc.'s stock is traded in the over-the-counter market under the symbol ABCW. AnchorBank, fsb, the wholly owned subsidiary, has 55 offices. All are located in Wisconsin.