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First Busey receives preliminary approval to participate in CPP

First Busey received approval to issue up to $100m of senior preferred stock plus warrants to buy common stock

First Busey, an American financial holding company, has received preliminary approval from the U.S.Department of the Treasury to participate in the capital purchase programme under the troubled asset relief programme.

First Busey has received preliminary approval to issue the Treasury up to $100 million of senior preferred stock, plus warrants to purchase common stock.

The capital purchase programme (CPP) is a voluntary programme designed to encourage financial institutions to increase capital in order to stimulate markets through increased lending. The CPP is a part of the troubled asset relief programme which was established by the Emergency Economic Stabilisation Act.

If First Busey’s board of directors decides to participate in the CPP, the senior preferred stock would carry a 5% dividend for each of the first five years of the investment and 9% thereafter, unless the senior preferred stock is redeemed earlier.

In conjunction with the senior preferred stock, First Busey would issue the Treasury 10-year warrants to purchase common stock with an aggregate market value of 15% of the preferred stock investment.

Van Dukeman, president and CEO of First Busey, said: As we continue to evaluate alternatives for raising capital, we are pleased to receive preliminary approval from the Treasury. During 2008, we originated in excess of $200 million of new loans primarily into our downstate Illinois markets.