Prospectus excerpt: Regions Financing Trust III, a Delaware statutory trust, which we refer to as the ÙTrust,ˆ will issue the Trust Preferred Securities. Each Trust Preferred Security represents an undivided beneficial interest in the assets of the Trust. The only assets of the Trust will be the 8.875% Junior Subordinated Notes due 2078 issued by Regions Financial Corporation, which we refer to as the ÙJSNs.ˆ The Trust will pay distributions on the Trust Preferred Securities only from the proceeds, if any, of interest payments on the JSNs.
The JSNs will bear interest at the annual rate of 8.875% from and including April 30, 2008 payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, beginning on June 15, 2008. Regions has the right, on one or more occasions, to defer the payment of interest on the JSNs for up to 20 consecutive interest periods or, if earlier, its first payment of current interest, without being subject to its obligations under the alternative payment mechanism described in this prospectus supplement and for up to 40 consecutive interest periods without giving rise to an event of default. In the event of Regions? bankruptcy, holders of the JSNs will have a limited claim for deferred interest.
The principal amount of the JSNs will become due on June 15, 2048, or if that day is not a business day, on the next business day (the Ùscheduled maturity dateˆ), to the extent of the applicable percentage of the net proceeds that Regions has from the sale of certain qualifying capital securities during a 180-day period ending on a notice date not more than 15 or less than 10 days prior to such date. Regions will use its commercially reasonable efforts, subject to certain market disruption events, to sell enough qualifying capital securities to permit repayment of the JSNs in full on the scheduled maturity date. If any amount is not paid on the scheduled maturity date, it will remain outstanding and Regions will continue to use its commercially reasonable efforts to sell sufficient qualifying capital securities to permit repayment of the JSNs in full. Regions must pay any remaining principal and interest in full on the JSNs on June 15, 2078, which is the final repayment date, whether or not it has sold qualifying capital securities.
At Regions? option, the Trust Preferred Securities may be redeemed on or after June 15, 2013 in whole or in part and prior to June 15, 2013 in whole but not in part after the occurrence of a tax event, capital treatment event or investment company event, as described herein, in each case at 100% of their principal amount plus accrued and unpaid interest to the date of redemption. The JSNs may also be redeemed in whole but not in part prior to June 15, 2013 at a make-whole redemption price after the occurrence of a rating agency event, as described herein.
The JSNs will be subordinated upon Regions? liquidation to all of its existing and future senior debt other than trade accounts payable and any debt that by its terms does not rank senior to the JSNs upon Regions? liquidation but will rank equally upon Regions? liquidation with its 6.625% Junior Subordinated Notes due 2077 held by Regions Financing Trust II and Regions guarantee of the related trust preferred securities, and will be effectively subordinated to all liabilities of Regions? subsidiaries. As a result, the Trust Preferred Securities also will be effectively subordinated to the same debt and liabilities. Regions will guarantee the Trust Preferred Securities on a subordinated basis to the extent described in this prospectus supplement.