Capstead Mortgage Corporation (NYSE: CMO) (“Capstead” or the “Company”) today announced the completion of its public offering for 6,800,000 shares of 7.50% Series E Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share (the “Series E Preferred Stock”), including an additional 800,000 shares of Series E Preferred Stock pursuant to the underwriters’ partial exercise of their 900,000 share overallotment option. The offering produced gross proceeds of $170 million, before deducting the underwriting discount and estimated offering expenses. The Company’s Series E Preferred Stock will be listed on the NYSE under the symbol “CMOPRE.”
Capstead intends to use the net proceeds from this offering, together with cash on hand, to fund the June 13, 2013 redemption of its outstanding $1.26 Cumulative Convertible Preferred Stock, Series B (the “Series B Preferred Stock”). The Company also has announced that on June 13, 2013 it will redeem any shares of its outstanding $1.60 Cumulative Convertible Preferred Stock, Series A that do not convert into shares of the Company’s common stock on or before June 6, 2013, after which time the right to convert permanently expires. Although the Series B Preferred Stock also is convertible on or before June 6, 2013, it is not considered economically advantageous for holders of the Series B Preferred Stock to convert their shares and few, if any, Series B Preferred Stock conversions are expected. See separate announcements and redemption notices issued by the Company on May 13, 2013 regarding these redemptions for more information.
Morgan Stanley & Co. LLC and UBS Securities LLC served as joint book-running managers on the offering. Keefe, Bruyette & Woods, Inc. and RBC Capital Markets, LLC served as joint lead managers. JMP Securities LLC and Mitsubishi UFJ Securities (USA), Inc. served as co-managers.
The offering is being made pursuant to the Company’s existing shelf registration statement previously filed with the Securities and Exchange Commission that became effective upon filing. This press release is neither an offer to sell nor a solicitation of an offer to buy shares of 7.50% Series E Preferred Stock.
Capstead is a self-managed real estate investment trust (a “REIT”) for federal income tax purposes. The Company earns income from investing in a leveraged portfolio of residential adjustable-rate mortgage pass-through securities, referred to as ARM securities, issued and guaranteed by government-sponsored enterprises, either Fannie Mae or Freddie Mac, or by an agency of the federal government, Ginnie Mae.
Cautionary Note Concerning Forward-looking Statements
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “intend,” “will be,” “will likely continue,” “will likely result,” or words or phrases of similar meaning. Forward-looking statements are based largely on the expectations of management and are subject to a number of risks and uncertainties including, but not limited to, the following:
- the Company’s expectations around the use of proceeds of this offering and the redemption of the Series A Preferred Stock and Series B Preferred Stock;
- changes in general economic conditions;
- fluctuations in interest rates and levels of mortgage prepayments;
- the effectiveness of risk management strategies;
- the impact of differing levels of leverage employed;
- liquidity of secondary markets and credit markets;
- the availability of financing at reasonable levels and terms to support investing on a leveraged basis;
- the availability of new investment capital;
- the availability of suitable qualifying investments from both an investment return and regulatory perspective;
- changes in legislation or regulation affecting exemptions for mortgage REITs from regulation under the Investment Company Act of 1940;
- changes in legislation or regulation affecting Fannie Mae, Freddie Mac, Ginnie Mae and similar federal government agencies and related guarantees;
- deterioration in credit quality and ratings of existing or future issuances of mortgage securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae; and
- increases in costs and other general competitive factors.
In addition to the above considerations, actual results and liquidity are affected by other risks and uncertainties which could cause actual results to be significantly different from those expressed or implied by any forward-looking statements included herein. It is not possible to identify all of the risks, uncertainties and other factors that may affect future results. In light of these risks and uncertainties, the forward-looking events and circumstances discussed herein may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. Forward-looking statements speak only as of the date the statement is made and the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Lindsey Crabbe, 214-874-2339