Preferred Apartment Communities, Inc.
Extract: Charter Amendment (Plain English Desc) from a DEF 14A on 09/25/2020   Download
SEC Document
SEC Filing
PROPOSAL NO. 2 – PROPOSAL TO APPROVE THE ARTICLES OF AMENDMENT TO THE COMPANY'S CHARTER TO REDUCE THE COMPANY'S CALL PERIOD ON ITS SERIES A REDEEMABLE PREFERRED STOCK FROM 10 YEARS TO 5 YEARS

Our Board of Directors recommends a vote FOR the proposal to approve the Articles of Amendment to the Company's charter to reduce the Company's call period on its Series A Redeemable Preferred Stock from 10 years to 5 years


Amendment to the Company’s Charter: Reduce the call period on the Company's Series A Redeemable Preferred

Our Board has adopted a resolution approving and recommending to our stockholders for their approval a proposed amendment to the Company's charter to allow the Company to redeem, at the Company's option, its Series A Redeemable Preferred Stock (the "Series A Preferred") beginning on the fifth anniversary of the date of issuance rather than the tenth anniversary of the date of issuance. The form of the Articles of Amendment to the Company's charter to change the time period before the Company may redeem its Series A Preferred Stock is attached to this Proxy Statement as Annex B (the "Series A Call Amendment"). As of August 31, 2020, there were 3,050,000 shares of Series A Preferred authorized and 2,005,257 shares of Series A Preferred issued and outstanding.

Purpose and Effect of the Series A Call Amendment

The Board's view is that the adoption of Proposal 2 provides the Company greater flexibility to manage its balance sheet when making strategic decisions with available capital. This change would not alter the rights of the holders of the Series A Preferred to cause their shares to be redeemed, but it will provide the Company, after five years from the date of original issuance, the right (but not the obligation) to redeem such shares of Series A Preferred at 100% of their stated value, initially $1,000 per share, plus accrued but unpaid dividends. In addition to balance sheet control, Proposal 2 also affords the Company additional expense control by allowing the Company to reduce its outstanding Series A Preferred resulting in a proportional reduction in dividend expense based on the amount of Series A Preferred retired. Providing the Company greater balance sheet and expense control flexibility adds tools for managing the Company going forward.

If approved by the requisite vote, the Series A Call Amendment will become effective upon the filing of Articles of Amendment with the SDAT to reflect the changes to the charter. If the Series A Call Amendment is not approved by the requisite vote, then the Series A Call Amendment will not be filed with the SDAT and the charter will still require a ten year period from the date of original issuance before the Company can call shares of its Series A Preferred.