— Transaction Will
Create a Scaled Commercial Mortgage REIT with a Combined Capital
Base in Excess of $1 Billion and a Diversified Investment Portfolio
—
— Substantially Improved Operating Leverage Due
to Increased Scale —
— Investment Portfolio Redeployment to Drive
Long-Term Earnings Accretion —
Ready Capital Corporation (NYSE:RC) (“Ready Capital”), a
multi-strategy real estate finance company that originates,
acquires, finances and services small- to medium-sized balance
commercial loans, and Anworth Mortgage Asset Corporation (NYSE:ANH)
(“Anworth”), a specialty finance REIT that focuses primarily on
investments in residential mortgage-backed securities, announced
today that they have entered into a definitive merger agreement
pursuant to which Ready Capital will combine with Anworth. The
combined company is expected to have a pro forma equity capital
base in excess of $1 billion. The combination is expected to
enhance shareholder liquidity and provide for increased operating
leverage across the larger equity base.
Under the terms of the merger agreement, each share of Anworth
common stock will be converted into 0.1688 shares of Ready Capital
common stock and $0.61 of cash consideration. Based on Ready
Capital’s closing stock price on Friday, December 4, 2020, the
implied offer price is $2.94 per share. Upon the closing of the
merger, Ready Capital stockholders are expected to own
approximately 76% of the combined company’s stock, while Anworth
stockholders are expected to own approximately 24% of the combined
company’s stock. Ready Capital will also assume Anworth’s three
outstanding series of preferred stock.
In connection with the merger, Waterfall Asset Management, LLC
(“Waterfall”), Ready Capital’s external manager, has agreed to
reduce the base management fee it charges Ready Capital by an
aggregate of $4 million over the four quarters immediately
following the closing of the transaction.
Based on the closing prices of Ready Capital’s common stock on
December 4, 2020, the market capitalization of the combined company
would be approximately $984 million. The combined company will
operate under the name Ready Capital and its shares are expected to
continue trading on the New York Stock Exchange under the existing
ticker symbol “RC”.
“This merger highlights our continued focus on establishing
Ready Capital as an industry-leading mortgage REIT, with the scale
and financial resources to pursue compelling risk-adjusted returns
across its diversified investment platform,” stated Ready Capital
Chairman and Chief Executive Officer Thomas Capasse. “The combined
company will be in a more formidable position to execute its
business plan, improve operating and cost efficiencies, and
continue growth in a prudent and profitable manner.”
Anticipated Benefits to Ready Capital and Anworth
Stockholders from the Merger
- Over $1 billion combined capital base and a diversified
investment portfolio
- Portfolio redeployment will enable Ready Capital to capitalize
on attractive investment opportunities
- Scale advantages include:
- Reduced operating expenses (as a percentage of combined capital
base)
- Improved access to financing, including corporate debt funding
alternatives
- Greater portfolio diversification
- Enhanced shareholder liquidity and investor base diversity
Management, Governance and Corporate Headquarters
Upon completion of the merger, Ready Capital’s Chairman and
Chief Executive Officer Thomas Capasse will lead the company and
Ready Capital executives Jack Ross, Thomas Buttacavoli, Andrew
Ahlborn and Gary Taylor will remain in their current roles. The
combined company will be headquartered in New York, New York. The
Board of the combined company is expected to have eight directors,
consisting of Ready Capital’s existing seven directors and one
independent director from Anworth’s current Board.
Timing and Approvals
The transaction has been unanimously approved by each of the
Boards of Directors of Ready Capital and Anworth. The transaction
is expected to close by the end of the first quarter of 2021,
subject to the respective approvals by the stockholders of Anworth
and Ready Capital and other customary closing conditions.
Advisors
Wells Fargo Securities is acting as exclusive financial advisor
and Alston & Bird LLP is acting as legal advisor to Ready
Capital. Credit Suisse is acting as exclusive financial advisor and
Greenberg Traurig LLP is acting as legal advisor to the Board of
Directors of Anworth.
Additional Information about the Merger
In connection with the proposed merger, Ready Capital expects to
file with the Securities and Exchange Commission (the “SEC”) a
registration statement on Form S-4, containing a joint proxy
statement/prospectus, and other documents with respect to the
proposed merger. The joint proxy/prospectus will contain important
information about the proposed transaction and related matters.
STOCKHOLDERS OF READY CAPITAL AND ANWORTH ARE URGED TO READ THE
REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS
(INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER
RELEVANT DOCUMENTS FILED BY READY CAPITAL AND ANWORTH WITH THE SEC
CAREFULLY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT READY CAPITAL, ANWORTH AND THE
PROPOSED MERGER.
Stockholders of Ready Capital and Anworth may obtain free copies
of the registration statement, the joint proxy statement/prospectus
and other relevant documents filed by Ready Capital or Anworth with
the SEC (if and when they become available) through the website
maintained by the SEC at www.sec.gov. Copies of the documents filed
by Ready Capital with the SEC are also available free of charge on
Ready Capital’s website at www.readycapital.com. Copies of the
documents filed by Anworth with the SEC are also available free of
charge on Anworth’s website at www.anworth.com.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
Participants in Solicitation Relating to the Merger
Ready Capital, Anworth and their respective directors and
executive officers, and certain other affiliates of Ready Capital
and Anworth may be deemed to be participants in the solicitation of
proxies from the stockholders of Ready Capital and Anworth in
respect of the proposed merger. Information regarding Ready
Capital’s directors and executive officers can be found in Ready
Capital’s definitive proxy statement filed with the SEC on May 14,
2020 and Ready Capital’s most recent Annual Report filed on Form
10-K for the fiscal year ended December 31, 2019. Information
regarding Anworth’s directors and executive officers can be found
in Anworth’s definitive proxy statement filed with the SEC on March
16, 2020 and Anworth’s most recent Annual Report filed on Form 10-K
for the fiscal year ended December 31, 2019. Additional information
regarding the interests of such potential participants will be
included in the joint proxy statement/prospectus and other relevant
documents filed with the SEC in connection with the proposed merger
if and when they become available. These documents are available
free of charge on the SEC’s website and from Ready Capital or
Anworth, as applicable, using the sources indicated above.
Forward-Looking Statements
This press release contains statements that constitute
“forward-looking statements,” as such term is defined in Section
27A of the Securities Act and Section 21E of the Exchange Act and
such statements are intended to be covered by the safe harbor
provided by the same. These statements are based on current
expectations and beliefs of Ready Capital and Anworth and are
subject to a number of trends and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements; neither Ready Capital nor Anworth can
give any assurance that its expectations will be attained.
Factors that could cause actual results to differ materially
from expectations include, but are not limited to, the risk that
the merger will not be consummated within the expected time period
or at all; the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger
agreement; the inability to obtain stockholder approvals relating
to the merger and issuance of shares in connection therewith or the
failure to satisfy the other conditions to completion of the
merger; risks related to disruption of management attention from
the ongoing business operations due to the proposed merger; the
effect of the announcement of the proposed merger on Ready
Capital’s and Anworth’s operating results and businesses generally;
the outcome of any legal proceedings relating to the merger; the
ability to retain key personnel; availability of suitable
investment opportunities; changes in interest rates; changes in the
yield curve; changes in prepayment rates; the availability and
terms of financing; general economic conditions; market conditions;
conditions in the market for small balance commercial loans and
other investments; legislative and regulatory changes that could
adversely affect the businesses of Ready Capital and Anworth; and
other factors, including those set forth in the Risk Factors
section of Ready Capital’s and Anworth’s most recent Annual Reports
on Form 10- K and other reports filed by Ready Capital and Anworth
with the SEC, copies of which are available on the SEC's website,
www.sec.gov. Neither Ready Capital nor Anworth undertakes any
obligation to update these statements for revisions or changes
after the date of this press release, except as required by
law.
About Anworth Mortgage Asset Corporation
Anworth Mortgage Asset Corporation (NYSE: ANH), a Maryland
corporation, is a specialty finance mortgage company organized to
qualify as a real estate investment trust (“REIT”) that invests
primarily in mortgage-backed securities that are either rated
“investment grade” or are guaranteed by federally sponsored
enterprises, such as Fannie Mae or Freddie Mac. Anworth seeks to
generate income for distribution primarily based on the difference
between the yield on their mortgage assets and the cost of their
borrowings. Anworth Mortgage Asset Corporation is headquartered in
Santa Monica, California, and is externally managed and advised by
Anworth Management LLC.
About Ready Capital Corporation
Ready Capital Corporation (NYSE: RC) is a multi-strategy real
estate finance company that originates, acquires, finances and
services small- to medium-sized balance commercial loans. Ready
Capital specializes in loans backed by commercial real estate,
including agency multifamily, investor and bridge as well as SBA
7(a) business loans. Headquartered in New York, New York, Ready
Capital employs over 400 lending professionals nationwide. The
company is externally managed and advised by Waterfall Asset
Management, LLC.
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Ready Capital Investor Relations
Ready Capital Corporation 212-257-4666
InvestorRelations@readycapital.com
Anworth Investor Relations Anworth
Mortgage Asset Corporation Attn: John T. Hillman (310) 255-4438
jhillman@anworth.com
Anworth Mortgage Asset (NYSE:ANH)
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