ITEM 1A RISK FACTORS
−Removed: Refer to Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of factors that could materially and adversely affect our business, financial condition, liquidity, results of operations and capital position.
−Removed: There have been no material changes in our risk factors from those described in our 2023 Annual Report on Form 10-K, other than the updates to the risk factor set forth below.
−Removed: Regulatory approvals may not be received, have taken longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the Merger.
−Removed: Before the Merger may be completed, various consents, approvals, waiver or non-objections must be obtained from state and federal governmental authorities, including the Federal Reserve Board, the Texas Department of Banking and the Director of the State of Washington Department of Financial Institutions.
−Removed: Satisfying the requirements of these governmental authorities have delayed and may further delay the completion of the Merger, or one or more of these approvals may not be obtained at all.
−Removed: In addition, these governmental authorities may include conditions or restrictions on the completion of the Merger, or require changes to the terms of the Merger.
−Removed: Under the Merger Agreement, the parties are not obligated to complete the Merger should any required regulatory approval contain any condition or restriction that would reasonably be expected to have a “material adverse effect” (as defined in the Merger Agreement) on the surviving entity in the Merger and its subsidiaries, taken as a whole, after giving effect to the Merger and the related merger of HomeStreet Bank into a wholly owned subsidiary of FirstSun.
−Removed: Because the market price of FirstSun common stock will fluctuate, the Company’s shareholders cannot be certain of the market value of the Merger consideration they will receive.
−Removed: In the Merger, each share of Company common stock that is issued and outstanding immediately prior to the effective time of the Merger (except for certain excluded shares) will be converted into 0.3867 of a share of FirstSun common stock.
−Removed: This exchange ratio is fixed and will not be adjusted for changes in the market price of either FirstSun common stock or Company common stock.
−Removed: Stock price changes may result from a variety of factors, including general market and economic conditions, changes in FirstSun’s and the Company’s businesses, operations and prospects, volatility in the prices of securities in global financial markets, including market prices for the common stock of other banking companies, and changes in laws and regulations, many of which are beyond FirstSun’s and the Company’s control.
−Removed: The value that the Company’s shareholders will receive upon the closing of the Merger will depend on the market price of FirstSun common stock at the closing of the Merger, which is currently traded only on the OTC Bulletin Board but is expected to be approved for listing on the Nasdaq Stock Market prior to the effective time of the Merger.
−Removed: Accordingly, at the time of the shareholder meeting of the Company to vote on the Merger Agreement, shareholders may not know the market value of the consideration that they will receive upon completion of the Merger.
−Removed: Issuance of shares of FirstSun common stock in connection with the Merger may adversely affect the market price of FirstSun common stock.
−Removed: In connection with the payment of the merger consideration, FirstSun will issue shares of FirstSun common stock to the Company’s shareholders.
−Removed: In addition, FirstSun will issue up to approximately 4.8 million shares of its common stock to certain investors in exchange for up to $155 million concurrently with the closing of the Merger.
−Removed: The issuance of these new shares of FirstSun common stock may result in fluctuations in the market price of FirstSun common stock, including a stock price decrease.
−Removed: In connection with the Merger, FirstSun will assume the Company’s outstanding debt obligations under its indentures and issue subordinated debt, and the combined company’s level of indebtedness following the completion of the Merger could adversely affect the combined company’s ability to raise additional capital and to meet its obligations under its existing indebtedness.
−Removed: In connection with the Merger, FirstSun will assume the Company’s outstanding debt obligations under the Company’s indentures.
−Removed: In addition, FirstSun is expected to issue prior to or as of the closing of the Merger at least $48.5 million of subordinated debt.
−Removed: FirstSun’s existing debt, together with any future incurrence of additional indebtedness, and the assumption of the Company’s outstanding indebtedness and issuance of subordinated debt in connection with the Merger, could have important consequences for the combined company’s creditors and the combined company’s stockholders.
−Removed: For example, it could:
−Removed: • limit the combined company’s ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes;
−Removed: • restrict the combined company from making strategic acquisitions or cause the combined company to make non-strategic divestitures;
−Removed: • restrict the combined company from paying dividends to its stockholders;
−Removed: • increase the combined company’s vulnerability to general economic and industry conditions; and
−Removed: • require a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on the combined company’s indebtedness, thereby reducing the combined company’s ability to use cash flows to fund its operations, capital expenditures and future business opportunities.
−Removed: The Merger Agreement limits the Company’s ability to pursue alternatives to the Merger and may discourage other companies from trying to acquire the Company.
−Removed: The Merger Agreement contains “no shop” covenants that restrict each of FirstSun’s and the Company’s ability to, directly or indirectly, among other things, initiate, solicit, knowingly encourage or knowingly facilitate, inquiries or proposals with respect to, or, subject to certain exceptions generally related to the exercise of fiduciary duties by FirstSun’s and the Company’s respective board of directors, engage in any negotiations concerning, or provide any confidential or non-public information or data relating to, any acquisition proposal.
−Removed: These provisions, which include a $10 million termination fee payable by the Company under certain circumstances (which may be reduced to $2.6 million if the Company or FirstSun terminates the Merger Agreement after the Company receives a competing proposal that constitutes a superior proposal under the Merger Agreement prior to 11:59 p.m.
−Removed: New York time on May 30, 2024), may discourage a potential third-party acquirer that might have an interest in acquiring all or a significant part of the Company from considering or proposing that acquisition.
−Removed: Holders of Company common stock will have reduced ownership and voting interest in the combined company after the consummation of the Merger and have less influence over management and the policies of the combined company.
−Removed: Shareholders of FirstSun and the Company currently have the right to vote in the election of the board of directors and on other matters affecting FirstSun and the Company, respectively.
−Removed: Assuming the Merger is completed, each Company shareholder (subject to certain exceptions) will become a holder of common stock of the combined company, together with existing FirstSun stockholders.
−Removed: The Company shareholders will then own approximately 19% of the combined company (after taking into account up to approximately 4.8 million shares to be issued to such equity investors concurrently with the closing of the Merger).
−Removed: Because of this, the Company’s shareholders in the aggregate will have less influence on the management and policies of the combined company than they now have on the management and policies of the Company.
−Removed: Shareholder litigation could prevent or delay the completion of the Merger or otherwise negatively impact the business and operations of FirstSun and the Company.
−Removed: On April 11, 2024, a putative shareholder of the Company filed a complaint against the Company and the Company’s Board of Directors in the U.S.
−Removed: District Court for the Southern District of New York (the “Complaint”), alleging, among other things, that the proxy statement/prospectus filed with the SEC on March 8, 2024 in connection with the Merger was materially incomplete and misleading.
−Removed: The Complaint seeks remedies, including an injunction enjoining the Merger and rescission or rescissory damages in the event the Merger contemplated by the Merger Agreement is consummated.
−Removed: Additional lawsuits may be filed in the future.
−Removed: One of the conditions to the closing is that there must be no order, injunction or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint preventing the consummation of the Merger or any of the other transactions contemplated by the Merger Agreement.
−Removed: If any plaintiff were successful in obtaining an injunction prohibiting FirstSun or the Company from completing the Merger or any of the other transactions contemplated by the Merger Agreement, then such injunction may delay or prevent the effectiveness of the Merger and could result in significant costs to FirstSun or the Company, including any cost associated with the indemnification of directors and officers of each company.
−Removed: FirstSun and the Company may incur additional costs in connection with the defense or settlement of any stockholder or shareholder lawsuits filed in connection with the Merger.
−Removed: Such litigation could have an adverse effect on the financial condition and results of operations of FirstSun and the Company and could prevent or delay the completion of the Merger.
+Added: Refer to Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and the Company's Quarterly Report for the quarter ended March 31, 2024 for a discussion of factors that could materially and adversely affect our business, financial condition, liquidity, results of operations and capital position.
+Added: There have been no material changes in our risk factors from those described in our 2023 Annual Report on Form 10-K and First Quarter 2024 Report on Form 10-Q.
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Sales of Unregistered Securities
−Removed: There were no sales of unregistered securities during the first quarter of 2024.
+Added: There were no sales of unregistered securities during the second quarter of 2024.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
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