Katahdin Bankshares Corp. (OTCQX: KTHN), the parent company of Katahdin Trust Company, has announced a significant financial move that underscores its commitment to strategic capital management. The company has extended an offer to repurchase up to $14.5 million of its 5.375% Fixed Senior Unsecured Notes, set to mature on June 15, 2026.
This repurchase offer, aimed at nine institutional investors currently holding the notes, represents a proactive approach to debt management. The company is offering to buy back the notes at par value, with no discount or premium applied. Additionally, Katahdin will pay all accrued but unpaid interest on the repurchased notes.
The funding for this repurchase program will come from a special dividend issued by Katahdin Trust Company. This strategic decision highlights the strong financial position of the subsidiary bank and its ability to support the parent company’s financial objectives.
Jon J. Prescott, President and CEO of Katahdin Bankshares Corp., commented on the move: “This repurchase offer aligns with our ongoing commitment to efficient capital management. By utilizing our strong cash position, we’re taking steps to optimize our debt structure and potentially enhance shareholder value.”
The company has emphasized that this repurchase program is not expected to have a material impact on the financial condition of Katahdin Trust Company. This assurance comes after the necessary notifications were made to relevant bank regulatory agencies, ensuring transparency and compliance with financial regulations.
The repurchase offer is scheduled to close on December 16, 2024, giving noteholders ample time to consider the proposal. This timeline also allows Katahdin Bankshares Corp. to carefully manage the process and ensure a smooth transaction.
The company has also maintained its commitment to shareholder returns, with the Board approving a continuation of its stock buyback program for 2024. This program authorizes the purchase of up to $2 million of the company’s outstanding common shares through December 31, 2024.
Katahdin Trust Company, founded in 1918, has established itself as a cornerstone of community banking in Maine. With 16 locations and assets exceeding $1.05 billion, the bank continues to play a vital role in the economic landscape of the region.
As Katahdin Bankshares Corp. moves forward with this note repurchase program, it demonstrates a balanced approach to financial management, focusing on debt optimization while maintaining strong liquidity and shareholder returns.
