Griffin Financial Group Advises The Official Committee of Trust Preferred Holders of Mercantile Bancorp, Inc.

Situation
Mercantile Bancorp, Inc., in the face of severe economic and regulatory challenges, including the threat of an FDIC Cross-Guaranty Assessment, filed for bankruptcy protection.

Solution
Griffin Financial Group was retained as an advisor to the Official Committee of The Trust Preferred Holders of Mercantile Bancorp, Inc., and charged with developing and executing strategies to improve the returns trust preferred securities holders could receive under  the bankruptcy code. Griffin, by reason of its diversity of expertise in banking, bank regulatory, bankruptcy and tax related matters, developed and utilized a dual path strategy to deliver improved returns to the Committee. Griffin initiated a re-marketing of the sale of the sole asset of the creditor, Mercantile Bank, with a view to generating additional interest and improved pricing.

Griffin simultaneously engineered and marketed a Debt for Equity Recapitalization Swap or “Alternative Transaction” designed to recapitalize the Company. Instrumental in the strategy, engineering and marketing of both paths was the unique understanding related to the particular tax attributes of the underlying bank and holding company, in the form of a sizeable net operating loss carry-forward (“NOLC”), deferred tax asset (“DTA”) and DTA Valuation Allowance. Griffin engineered the swap transaction to avoid any breach in change in control, preserving the viability of reversing the valuation allowance at some point in the future. 

Griffin was instrumental in introducing institutional investors to both concepts, ultimately generating deeper interest in the ongoing 363 sale process.

Measures of Success
As a result of the process, pricing on the sale of assets, primarily the underlying Bank, improved, providing additional cash proceeds available to the creditor, Mercantile Bancorp, Inc., and ultimately the Trust Preferred Securities Holders.