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MCBC > SEC Filings for MCBC > Form 8-K on 13-Aug-2013All Recent SEC Filings

Show all filings for MACATAWA BANK CORP



Termination of a Material Definitive Agreement, Other Events

Item 1.02 Termination of a Material Definitive Agreement

The Company had outstanding $1,650,000 aggregate principal amount of its 11% subordinated notes due 2017 (the "Notes"). The Company's annual interest expense on the Notes at their 11% annual interest rate was $181,500. On August 7, 2013, the Company notified the holders of the Notes that all of the Notes are called for prepayment in full as of a prepayment date of August 13, 2013. The Notes are deemed prepaid and redeemed as of the prepayment date. The aggregate prepayment amount was the principal amount of $1,650,000 plus interest accrued through the prepayment date.

Item 8.01 Other Events.

Rescission of Board Resolution

As previously disclosed, in connection with the October 26, 2012 termination of Macatawa Bank Corporation's (the "Company") Written Agreement with the Federal Reserve Bank of Chicago (the "FRB"), the Board of Directors of the Company adopted a resolution (the "Board Resolution") requiring the Company to obtain written approval from the FRB before declaring or paying any dividends, increasing holding company debt or redeeming any capital stock. By letter dated August 1, 2013, the FRB advised the Company that, based on the overall satisfactory condition of the organization, the FRB poses no objection should the Board of Directors choose to rescind the Board Resolution. The Company's Board of Directors has rescinded the Board Resolution.

Trust Preferred Securities

The Company has outstanding $40,000,000 aggregate liquidation amount of pooled trust preferred securities ("TRUPs") issued through its wholly-owned subsidiary grantor trusts, Macatawa Statutory Trust I (issued $20,000,000 aggregate liquidation amount with a floating interest rate of three-month LIBOR plus 3.05%) and Macatawa Statutory Trust II (issued $20,000,000 aggregate liquidation amount with a floating interest rate of three-month LIBOR plus 2.75%). In December 2009, the Company exercised its right to defer interest payments on the TRUPs for 20 consecutive quarters or until such earlier time as is determined by further action of the Board of Directors. Through June 30, 2013, the Company has deferred interest payments on the TRUPs for 15 quarters. The Company has continued to accrue interest during the deferral period and at June 30, 2013 total unpaid interest accrued on the TRUPs was $5,398,500. Interest on unpaid interest is required to be accrued and compounded quarterly at the stated interest rate. As of June 30, 2013, interest expense on unpaid interest was accruing at an annualized cost of approximately $170,000 per year. Upon termination of the deferral, all accrued and unpaid interest is due and payable.

The Company intends to discontinue the deferral and resume regular quarterly interest payments on the TRUPs beginning with the next regularly scheduled interest payment dates and pay all accrued and unpaid interest that becomes due and payable upon the discontinuance of the deferral. For Macatawa Statutory Trust I, the next regularly scheduled interest payment date is

September 30, 2013. For Macatawa Statutory Trust II, the next regularly scheduled interest payment date is October 7, 2013.

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