ARMOUR Residential REIT, Inc. (NYSE: ARR, ARR PrA and ARR PrB)
(“ARMOUR”) announced today the final cash purchase price per share
(the “Tender Offer Price”) of common stock (“JAVELIN Common Stock”)
of JAVELIN Mortgage Investment Corp. (NYSE:JMI) (“JAVELIN”) offered
by ARMOUR pursuant to its previously announced offer (the “Tender
Offer”) to purchase, through its newly formed subsidiary, JMI
Acquisition Corporation (“Acquisition”), all of the shares of
JAVELIN Common Stock.
The final Tender Offer Price is $7.18 per share
of JAVELIN Common Stock. The final Tender Offer Price was
determined as described in the Offer to Purchase dated March 7,
2016 (as amended and supplemented from time to time, the “Offer to
Purchase”) and the related Letter of Transmittal that accompanies
the Offer to Purchase (the “Letter of Transmittal”), which is also
described below.
ARMOUR previously announced that it and
Acquisition had commenced the Tender Offer on March 7, 2016, to
purchase all the shares of JAVELIN Common Stock for an amount in
cash equal to 87% of the book value per share of JAVELIN Common
Stock (“BVPS”), as of 5:00 P.M., New York City time, on the date
that was ten (10) business days prior to the expiration of the
Tender Offer, which was March 18, 2016 (the “Calculation Date”),
subject to any required withholding taxes, in accordance with the
Agreement and Plan of Merger dated as of March 1, 2016, among
ARMOUR, Acquisition and JAVELIN (the “Merger Agreement”). The BVPS
as of 5:00 P.M., New York City time, on the Calculation Date was
$8.25, resulting in the final Tender Offer Price of $7.18 per share
of JAVELIN Common Stock.
BVPS was calculated by JAVELIN, subject to the
review by and approval of an independent special committee of the
Board of Directors of JAVELIN consisting of the director who is not
employed by or otherwise affiliated with ARMOUR, ARMOUR Capital
Management LP, the external manager of JAVELIN and ARMOUR, or any
of their respective subsidiaries (the “Special Committee”), using
the following data: (i) the market value of JAVELIN’s agency
securities and derivatives as of the Calculation Date, (ii) the
appraised value of JAVELIN's non-agency securities as of the
Calculation Date, or the most recent date as of which such value
was determinable, (iii) cash balances in JAVELIN’s bank accounts as
of the Calculation Date, (iv) JAVELIN’s repurchase agreement
balances and interest payable to repurchase counterparties as of
the Calculation Date, and (v) any other tangible assets or
liabilities determined in accordance with generally accepted
accounting principles, consistently applied, including accruals, as
of the Calculation Date, less $1.0 million in respect of JAVELIN’s
expenses related to the Tender Offer and the Merger (as defined
below) not included in the above-referenced accruals. JAVELIN
calculated BVPS using the same valuation methodologies as it has
historically used to calculate book value in the Company’s updates,
which are typically posted on a monthly basis on JAVELIN’s website,
www.javelinreit.com, and furnished as an exhibit to a current
report on Form 8-K filed by JAVELIN with the Securities and
Exchange Commission. The market values of agency securities as of
the Calculation Date and the appraised values of non-agency
securities as of the Calculation Date were determined using
valuations for each security in JAVELIN’s portfolio provided by
Interactive Data Corporation, a third-party pricing service, and
the market values of JAVELIN’s interest rate derivatives as of the
Calculation Date were determined using pricing provided by
Bloomberg’s BVAL pricing service, a third-party service.
The Tender Offer is being made upon the terms
and subject to the conditions set forth in the Offer to Purchase
and Letter of Transmittal, both of which have been distributed to
the holders of JAVELIN Common Stock. The Tender Offer will expire
at 11:59 P.M., New York City time, on April 1, 2016 (the
“Expiration Time”), unless it is extended.
ARMOUR believes that the final Tender Offer
price is an attractive offer to JAVELIN stockholders because it
represents:
- A 19.7% premium over the last reported sale price of JAVELIN
Common Stock on March 1, 2016 (the last trading day before the
public announcement of ARMOUR’s proposal to acquire the JAVELIN
shares at the Tender Offer Price);
- A 24.8% premium over the weighted average trading price of
JAVELIN Common Stock during the 30 trading days ended on
March 1, 2016; and
- A 10.0% premium over ARMOUR’s estimate of JAVELIN’s liquidation
value, which is less than 80% of book value based on anticipated
costs to terminate financing, hedging and management agreements,
expenses of winding down operations, and losses on an immediate
liquidation of assets. ARMOUR also believes that a liquidation in
the face of current market volatility would pose substantial risks
to JAVELIN stockholders’ ability to realize this amount.
The Board of Directors of JAVELIN, acting upon a
recommendation by the Special Committee, has unanimously determined
to recommend that the JAVELIN stockholders tender their shares in
the Tender Offer.
Under the Merger Agreement, Acquisition will not
accept shares that are tendered in the Tender Offer unless they
include greater than fifty percent (50%) of the total number of
outstanding shares of JAVELIN Common Stock that are not owned
immediately before the Expiration Time by ARMOUR, any of its
subsidiaries or any officers or directors of ARMOUR, or JAVELIN
(the “Minimum Condition”). The Minimum Condition is not waivable.
If the Minimum Condition is satisfied and Acquisition purchases the
shares that are properly tendered and not withdrawn, Acquisition
will subsequently be merged into JAVELIN (the “Merger”) in a
transaction in which ARMOUR will become the sole stockholder of
JAVELIN and the persons who are stockholders of JAVELIN immediately
before the Merger will receive the same amount per share they would
have received if they had tendered their JAVELIN stock in the
Tender Offer.
The Tender Offer is subject to customary
conditions in addition to the Minimum Condition. ARMOUR has the
right to waive any or all of those additional conditions. ARMOUR
also has the right to extend the expiration date of the Tender
Offer and to amend the terms of the Tender Offer, except that the
Merger Agreement does not permit ARMOUR to decrease the offer
price, to reduce the number of shares it is seeking, or to change
the form of consideration.
Lazard Frères and Co. LLC served as financial
advisor to ARMOUR and provided a fairness opinion to ARMOUR’s Board
of Directors. Akerman LLP served as legal counsel to ARMOUR. JMP
Securities LLC served as financial advisor to JAVELIN’s Special
Committee and provided a fairness opinion to JAVELIN’s Special
Committee. Duane Morris LLP and Venable LLP served as legal counsel
to JAVELIN’s Special Committee. Wachtell, Lipton, Rosen & Katz
served as legal counsel to JAVELIN.
The Information Agent with regard to the Tender
Offer is Alliance Advisors LLC. Continental Stock Transfer &
Trust Company is the Depositary and Paying Agent.
Notice to Investors
This press release is not an offer to purchase,
or a solicitation of sales of, JAVELIN Common Stock or any other
securities. The Tender Offer is made solely by the Offer to
Purchase and the related Letter of Transmittal. ARMOUR has filed
with the Securities and Exchange Commission (the “SEC”) a Tender
Offer Statement on Schedule TO, as amended and supplemented from
time to time, that includes the Offer to Purchase and the related
Letter of Transmittal and other documents relating to the Tender
Offer. In addition, JAVELIN has filed with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9, as amended
and supplemented from time to time, that describes, among other
things, the unanimous recommendation of JAVELIN’s Board of
Directors that JAVELIN’s stockholders tender their shares in the
Tender Offer. The documents filed with the SEC contain important
information, and JAVELIN stockholders are urged to read them, all
amendments and supplements thereto, and the exhibits to them in
their entirety in connection with their decision whether to tender
their shares. Those documents can be obtained at no charge at the
SEC’s website, www.sec.gov. In addition, copies of the Offer to
Purchase, the Letter of Transmittal and other documents relating to
the Tender Offer can be obtained from the Information Agent,
Alliance Advisors LLC, at 200 Broadacres Drive, 3rd Floor,
Bloomfield, NJ 07003, or by calling toll free (888) 991-1294 (for
stockholders) or (973) 873-7721 (for banks and brokers).
Forward-Looking Statements
This press release includes forward-looking
statements. Actual results may differ from expectations, estimates
and projections and, consequently, you should not rely on these
forward-looking statements as predictions of future
events. Words such as “expect,” “estimate,” “project,”
“budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,”
“will,” “could,” “should,” “believes,” “predicts,” “potential,”
“continue,” and similar expressions are intended to identify such
forward-looking statements. These forward-looking statements
involve significant risks and uncertainties that could cause the
actual results to differ materially from the expected results,
including (i) that the Tender Offer may not be completed at
all or on the terms described, and (ii) that the Merger may not be
consummated. Additional information concerning these and other risk
factors are contained in the most recent filings of ARMOUR with the
SEC. All subsequent written and oral forward-looking
statements concerning ARMOUR are expressly qualified in their
entirety by the cautionary statements above. ARMOUR cautions
readers not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. ARMOUR does
not undertake or accept any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
to reflect any change in their expectations or any change in
events, conditions or circumstances on which any such statement is
based.
ARMOUR Contact:
James R. Mountain
Chief Financial Officer
ARMOUR Residential REIT, Inc.
(772) 617-4340
Javelin Mortgage Investment Corp. (NYSE:JMI)
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