* To raise $255 mln from investors
* Rights issue to bring in $20 mln * Carlyle Group, Anchorage Advisors to invest about $73 mln
* Number of directors on board to be cut to 9 from 18
May 24 (Reuters) - Hampton Roads Bankshares Inc HMPR.O said it has entered into agreements with institutional investors to raise $255 million in capital, and also plans to conduct a $20 million rights offering.
The company said private equity firm Carlyle Group [CYL.UL] and private investment firm Anchorage Advisors, L.L.C. would buy 168.8 million shares for about $73 million each, with each owning 23.1 percent of the voting equity of the company, following the close of the transactions.
Hampton Roads had a market capitalization of about $37 million, according to Reuters data as on May 21.
The rights offering would allow existing shareholders to purchase common shares at the same purchase price as the investors, the company said.
The company, which operates sixty banking offices in Virginia, North Carolina and Maryland, said total common shares to be issued in the capital raise, including shares to be issued in the rights offering, would represent 87.7 percent of outstanding common stock.
Hampton Roads said it plans to use the proceeds of the investment and the rights offering to make capital contributions to and strengthen the balance sheets of its subsidiary banks, and for general corporate purposes.
In connection with the closing of the deals, the company’s board of directors would be reduced from eighteen members to nine members, the company said.
The company expected several members of its current board, including Chief Executive Andy Davies, to continue as directors following the investment.
Carlyle and Anchorage would appoint one director each to the company’s board.
Hampton Roads also said the U.S. Treasury intended to exchange the preferred stock it bought from the company under its Troubled Asset Relief Program into 581.4 shares of mandatorily convertible preferred stock.
Following the transaction, the U.S. Treasury would own 6.4 percent of the voting equity of the company
Shares of the company were up 17 percent at $1.95 in early morning trade on Nasdaq.
Reporting by Brenton Cordeiro in Bangalore; Editing by Prem Udayabhanu