Santa Rosa, Calif., (June 16, 2021) – American AgCredit, a member-owned Farm Credit cooperative, today announced that furthering its mission of improving the lives of farmers and ranchers, it has raised $500 million of third-party capital by issuing $200 million of subordinated notes and $300 million of preferred stock into the private capital markets.
“American AgCredit is experiencing significant and profitable growth – our assets have grown at a compound annual growth rate of 15.2 percent over the last five years,” said Curt Hudnutt, President and CEO of American AgCredit. “Acquiring this favorably priced capital will allow us to continue to invest in our mission.”
These transactions include a $200 million aggregate principal amount of 3.375 percent fixed-to-floating rate subordinated notes due 2036 and $300 million of 5.25 percent fixed-rate reset perpetual non-cumulative preferred stock. The preferred stock will rank junior to the subordinated notes.
Through these two transactions, American AgCredit raised $500 million of capital from 35 different institutional investors at an initial weighted average cost of 4.50%.
American AgCredit will use the net proceeds of the offerings to provide more capacity to support the capital needs of the Association’s customers.
“We are continually working to optimize our capital structure to fund our growth. This offering provides American AgCredit significant capital to reinvest in rural America while giving investors a unique opportunity to participate in our substantial and profitable growth,” noted George Fontes, Chair, American AgCredit Board of Directors.
Piper Sandler & Co. acted as the financial advisor and the sole initial purchaser. The subordinated notes qualify as Tier 2 capital and the preferred stock will qualify as Tier 1 capital for regulatory purposes,
This press release does not constitute an offer to sell, or a solicitation of an offer to buy the securities, nor shall there be any sale of the securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The securities being offered have not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of either prospectus supplement or the shelf registration statement or prospectus relating thereto.
These securities shall not be resold, pledged, or otherwise transferred to any Farm Credit System Bank or any System Association or to any service corporation pursuant 12 U.S.C. § 2211 chartered by the Farm Credit Administration and owned by any System Bank or any System Association (“Service Corporation”) or to any employee or board member of any System Bank, any System Association, or any Service Corporation (including a “Family” member of any such employee or board member as defined in 12 C.F.R. § 612.2130(f)).
Any forward-looking statements are based on current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from expectations due to a number of risks and uncertainties. More information about these risks and uncertainties is contained in our 2020 Annual Report. We undertake no duty to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
About American AgCredit
Founded in 1916, American AgCredit is part of the nationwide Farm Credit System, and is the nation’s fourth-largest Farm Credit Association. American AgCredit specializes in providing financial services to agricultural and rural customers throughout California, Colorado, Hawaii, Kansas, New Mexico, Nevada and Oklahoma – as well as to capital markets customers throughout the country.
Financial services provided by American AgCredit include production and mortgage financing, equipment and vehicle leasing, crop and life insurance, lines of credit, and the Young, Beginning and Small Farmer Program. In addition, the Association provides interest-free loans for qualifying 4-H and FFA AgYouth programs, as well as college scholarships to young people interested in agriculture. Learn more at www.AgLoan.com.
For investor relations inquiries, please contact us here.