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Two Harbors Investment Corp. Message Board

  • joeytheghost joeytheghost Mar 20, 2013 1:15 PM Flag

    Closing Date on SPO - I.R. Phone Call

    Folks I spoke with a nice lady named July; let me say she COULD NOT as a matter of policy give me exact numbers. Having said that, she indicated that the NEW stock WOULD be eligible for the SBY distribution if the deal closed before the ex-div date and she gave me the "math". Presently, we would receive 6 shares of SBY for every share of TWO my math not hers. HOWEVER, the "new stock" would lower this distribution if the SPO closes prior to the ex-div date. Nice lady and we left it there, and I must say I was impressed with the fast response I received. Now, the not so good news; the SPO is expected to close on 22 March 2013 (Investors Business Daily), therefore with the "new stock" getting the distribution and being conservative I think on the high side we will see 5 shares per 100 and on the low side 4.5 shares. This may not be what you want to hear and you can now add all the thumbs down. SBY is currently UP in todays trading.

    Sentiment: Hold

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    • yourbestfriendintheworld yourbestfriendintheworld Mar 23, 2013 2:15 PM Flag

      According to the PR wire and the 8-K just filed, it closed yesterday, with no overallocation shares having been bought on the market in the greenshoe. They dodged a bullet at the bell on Tuesday. The underwriters covered their 15% short by exercising the full option.

      So TWO got the offer price of $13.46 for all 57.5 million shares, and paid about $11 million in fees to the underwriters (1.4% of the SPO, which isn't a screaming deal, but is pretty good compared to the old benchmark of 7%; being a frequent customer with a red-hot product gets you some consideration from the banksters).

      • 1 Reply to yourbestfriendintheworld
      • "Best Friend" - Many thanks for the update. It will be interesting indeed where the stock price will fall once the SBY deal is complete but they were up 3% in todays trading. I am going to hold TWO the MSO business is lucrative and I trust they will not let the SPO money lay around. Willing for now to go with 9%. The SBY distribution is a VERY nice score for me. Good luck with your positions. Joey

    • shamsheer@ameerally.com shamsheer Mar 20, 2013 4:00 PM Flag

      6/1 would render the current SP level above $60. July is not correct.

      My maths equate;
      ((issue/Two share pool+common share offer&2.8%leaway to target price@$14) *Silverbay SP)+q1 dividend

      "(17,824,647/(300m+50m+8.5m))*19.17)+0.32
      (.0497)*19.17+0.32
      0.95+0.32
      =
      1.27 dollars (sorry i have a £ keyboard)
      which equates to aprox;
      9% on the current SP @ 13.70

      My guess is that they envisage a clean dollar distrubution per TWO share owned (even though i calculated .95cents).

      Im guessing after treating investors like this we could see alot more investors joining ship and TWOs Equity growing very quickly in the REIT industry :)

      Sentiment: Strong Buy

    • I like your math (six shares of SBY for every share of TWO), meaning we'd get almost $120 for every $13.50.

      However, I think you need to adjust your calculator.

    • Since no one really knows what the prices of TWO or SBY will be on the closing date, I think that it is perfectly reasonable for her not to give you specific numbers.

      • 1 Reply to gman310
      • Gman, thank you for your reply; as a matter of policy, nobody in any stock working in ivestor relations are prohibited from making forward looking statements, this may be an SEC regulation. Granted, nobody has a crystal ball here. My experience with I.R. departments is that they will try to explain to a shareholder on how you can arrive at the math but not much more. Questions of public record they will answer. Like you, I await the numbers. Good luck with your position. This is a tricky piece of business imho.

    • Joey, I am a little confused (or maybe July was :) as to what the "closing" of the secondary has to do with getting the shares of SBY. Those shares are a dividend - quoting management - "Silver Bay Common Stock will be distributed, on a pro rata basis, to Two Harbors stockholders of record at the close of business on April 2, 2013". I guess the real question (or maybe the one everyone was thinking was the actual question and I am just real slow) is whether the 7.5 million overage would be eligible for the SBY stock. That is a reasonable thing to be undecided about.

      • 2 Replies to rosilvernail
      • Additionally, the distribution of the proceeds of the SBY shares seems be coming after they are acquired and sold. Since we don't know what the actual acquisition price will be, and I don't think that they will be able to unload the entire position immediately, this may take place as two separate events.

      • Should Goldman Sachs and the other underwriters of this SPO take delivery of the stock they to will be entitled to the distribution; please be aware that the distribution of the SBY shares are NOT a dividend and are a non-taxable event but as always check with your CPA. SBY was up nicely from yesterdays blood bath. TWO imho is a good company and I remain in a "HOLD" position. You may want to take a look at EFC, this stock has been VERY kind to me.

        Sentiment: Hold

 
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