Republic First Bancorp is taking another stab at raising some much-needed capital, only this time the dissident Norcross-Braca investor group is inside the tent.
The Norcross-Braca group has been battling for control of the $6 billion-asset, Philadelphia-based company for nearly two years. It announced plans Wednesday to invest at least $35 million in common stock and securities, provided Republic First can first raise $40 million from third-party investors. While $40 million is the threshold necessary for the two sides to enter into a definitive agreement, Republic First, working with investment bank Raymond James, will seek to raise as much as $70 million from outside investors. Details of the agreement were included in a nonbinding letter of intent signed Tuesday.
“As significant Republic shareholders, we believe in the company’s potential and are excited about being part of its next chapter,” George Norcross said Wednesday in a press release. The Norcross-Braca group owns just under 10% of Republic First’s outstanding shares, according to a report filed Thursday with the Securities and Exchange Commission. Norcross, executive chairman of the Camden, New Jersey-based insurance consulting firm Conner Strong & Buckelew, leads the group, which includes his brother Philip, a prominent New Jersey attorney, and former TD Bank CEO Greg Braca.
According to Federal Deposit Insurance Corp. statistics, Republic First, the holding company for Republic Bank, reported a core capital ratio of 5.56%, lower than the industry average of 8.74%. In March, Republic First announced plans to raise $125 million in capital in partnership with an investor group led by Castle Creek Capital, only to see the transaction — announced the same day Silicon Valley Bank failed — come apart in May. The failure prompted sharp criticism from the Norcross-Braca group, which wasn’t party to the deal.
Additional capital would address a pressing need for Republic First, providing “greater flexibility to invest in the business and deliver extraordinary service to our loyal customer base and depositors,” CEO Thomas Geisel said Wednesday in the press release. “We plan to work with the Norcross-Braca group to put Republic on the best footing possible to enhance value for all shareholders.”
Both Republic First and the Norcross-Braca group declined further comment.
If the capital raise is successful, the Norcross-Braca group has also agreed to drop all litigation against Republic First and cease proxy solicitation efforts. Last week, Republic First announced a postponement of its annual meeting, which had been scheduled for Oct. 5, until Dec. 19. The Norcross-Braca group had planned to seek three board seats at the annual meeting.
In addition to capital, the agreement between Republic First and the Norcross-Braca group includes adding two seats to the company’s seven-member board of directors and overhauling its membership. Norcross-Braca would gain the right to appoint two directors. Another two seats would be allocated to third-party investors, while two new independent directors would be selected. Geisel would occupy one of the three remaining board seats, leaving just two for current directors. Neither Republic First nor the Norcross-Braca group have given any indication of who would occupy seats on the reconstituted board.
Republic First also agreed to pay the Norcross-Braca group at least $10.5 million, part as a consulting fee and part to reimburse the group for legal, investment banking and other expenses as part of a final arrangement.
News of the nonbinding letter of intent came two weeks after the Norcross-Braca group announced it would pause its litigation efforts and offered encouragement to Republic First in its effort to attract new capital. “We remain actively engaged with the company and other parties on capital raising solutions,” George Norcross said in a Sept. 11 statement.
The lengthy and frequently bitter struggle has contributed to a steep decline in the value of Republic First stock. Shares, which traded at $2.12 at the beginning of 2023, were selling for 19 cents Thursday afternoon.