Broadway Financial Investors to Sell 26.8M Shares of Stock

Investors who backed Broadway Financial's 2013 recapitalization are cashing out.

The $338 million-asset Los Angeles company disclosed in a regulatory filing Tuesday that certain investors will sell nearly 27 million shares of common stock. Notable sellers include the Treasury Department, Gapstow Capital Partners, BBCN Bancorp and Cathay General Bancorp.

The Treasury is planning to cash out of its remaining 35% stake in Broadway by selling about 10 million shares, while Gapstow will exit its investment by selling its 21.9% stake. BBCN and its bank are planning to completely cash out of a 6.62% stake. Meanwhile, Cathay is looking to sell 70% of its 715,000 shares to reduce its current 2.46% stake.

Broadway will not receive any of the proceeds. The company's stock closed at $1.27 s a share on Tuesday.

In August 2013, Broadway traded common stock for about $22.8 million in Troubled Asset Relief Program preferred shares and other obligations, while also raising more than $4 million. The restructuring was made up of privately negotiated transactions with each participant, which required endless rounds of discussions and collaboration with regulators.

The Treasury was the first party to agree to restructure Broadway's debt by exchanging Broadway's $17.6 million in Tarp shares, the largest single liability, for common stock at a 50% discount.