MOODY'S CONFIRMS UNION PLANTER'S RATINGS AND PLACES MAGNA GROUP'S LONG-TERM SUBORDINATED DEBT RATING OF B1 ON REVIEW FOR POSSIBLE UPGRADE
New York, 02-24-98 -- Moody's Investors Service confirmed Union Planter's Corporation's subordinated debt of Baa2 as well as all ratings for Union Planters N.A. In addition, the ratings agency has put Magna Group's long-term subordinated debt rating of B1 on review for possible upgrade.
Moody's ratings actions follow an announcement that Union Planters Corporation ("UPC") has signed a definitive agreement to acquire Magna Group ("MGR") in a stock swap transaction valued at approximately $2.3 billion. The new entity will have combined total assets of approximately US$28.5 billion and deposits of US$21.5 billion.
If the MGR transaction is consummated, the rating agency said, the new entity will benefit from cost savings associated with improved efficiencies through consolidation of back office processing systems and
other support functions. In addition, UPC will also benefit from enhancing its core deposit base, as well as significantly improving its geographic diversification. Both cost savings and job losses will be somewhat less
than with some of the recent large mergers in the U.S. given the lack of geographical overlap between the two entities in both Iowa and Illinois, and Union Planter's previously weak position in the St. Louis area market.
As a combined entity, the merged bank will have the third largest market share in St. Louis.
Moody's noted that UPC's purchase of MGR will be its largest acquisition to date, equal to almost 38% of the bank's year end 1997 assets. This acquisition, along with a number of recent ones will present a signficant
challenge to management's ability to integrate the various franchises. All long term ratings for Magna Group were put on review for possible upgrade.
The following ratings were confirmed:
Union Planters Corporation--- Baa2 for the Corporation's long term subordinated debt.
Union Planters N.B.---A2 for the bank's counterparty obligations and other senior obligations; A2 on the bank for long-term bank deposits; Prime-1 for short-term bank deposits and other senior obligations; and C for the bank's financial strength rating.
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