In a significant move to enhance its capital structure, Byline Bancorp, Inc. (NASDAQ: BY) has filed an amendment to its Form S-4 with the Securities and Exchange Commission (SEC) on October 31, 2025, announcing an exchange offer for up to $75 million aggregate principal amount of its 6.875% Fixed-to-Floating Rate Subordinated Notes due 2035. The exchange offer will allow holders of the outstanding unregistered notes, referred to as the "Old Notes," to exchange them for an equal principal amount of registered notes, termed "New Notes."
The strategic rationale behind this transaction is to alleviate transfer restrictions that are currently imposed on the Old Notes, thus allowing for better liquidity and marketability of the New Notes. Byline Bancorp aims to facilitate easier trading for investors, as the New Notes will not be subject to the same registration rights and additional interest provisions that apply to the Old Notes.
The exchange offer is set to expire at 5:00 p.m. New York City time on a date to be determined in 2025, unless extended. Once the exchange offer is consummated, all Old Notes that are validly tendered will be exchanged for the New Notes. Importantly, this exchange will not trigger a taxable event for U.S. federal income tax purposes, making it an attractive option for investors.
Byline Bancorp will not receive any proceeds from this exchange offer, as it is essentially a replacement of one set of notes with another. The company will bear all expenses associated with the exchange. Notably, there is currently no public market for either the Old or New Notes, and there are no plans to list the New Notes on any national securities exchange.
In terms of market impact, this exchange offer is expected to benefit current shareholders by potentially enhancing the liquidity of Byline Bancorp’s debt securities. Employees and stakeholders may also view this move positively as it reflects the company's commitment to improving its capital structure and operational flexibility.
From a regulatory perspective, while the exchange offer is subject to customary conditions, it does not require any significant antitrust or regulatory approvals, streamlining the process for Byline Bancorp to execute this strategic initiative. The company has also indicated that it will provide important updates and information to investors and stakeholders as the exchange offer progresses.
In summary, Byline Bancorp's exchange offer represents a calculated effort to optimize its financial framework, improve liquidity for investors, and enhance the overall marketability of its securities.