Popular shares fall on proposed share exchange offer
(Reuters) - Shares of Popular Inc (BPOP.O: Quote, Profile, Research) fell as much as 16 percent on Tuesday, a day after the Puerto Rico-based bank set a plan to boost its Tier I common equity by about $1.2 billion through an exchange offer and said it will suspend dividends on its common and preferred stock after June 30.
The company plans to offer up to 390 million common shares in exchange for preferred shares, prompting rating agency Fitch to cut its issuer default rating on the company.
Fitch ratings agency downgraded the long-term issuer default rating of Popular Inc to 'B' from 'BBB', saying the magnitude of the plan underscores asset quality challenges currently being faced by Popular.
Popular, Puerto Rico's largest bank, said the common equity increase is to accommodate more adverse economic and credit scenarios assumed under the Supervisory Capital Assistance Program.
Shares of the company touched a low of $2.12 in early trade before they pared losses to trade down 10 percent at $2.29 on Nasdaq in afternoon trade.
(Reporting by Archana Shankar in Bangalore; Editing by Jarshad Kakkrakandy)
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