Chimera Investment Corporation (NYSE: CIM) (the "Company") today announced the pricing of an underwritten public offering of $325 million aggregate principal amount of its 7.00% convertible senior notes due 2023 (the "Notes") at an issue price of 100%, plus accrued interest, if any, from April 13, 2020. The offering is expected to close on April 13, 2020 and is subject to customary closing conditions. The Company has granted the underwriter an option to purchase up to an additional $48.75 million aggregate principal amount of the Notes to cover over-allotments.
The Notes will be senior unsecured obligations of the Company, pay interest semiannually in cash on April 1 and October 1 of each year at a rate of 7.00% per annum and will mature on April 1, 2023, unless earlier converted, redeemed or repurchased in accordance with their terms.
The Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day prior to the maturity date into shares of the Company’s common stock at an initial conversion rate of 153.8461 shares of the Company’s common stock per $1,000 principal amount of the Notes (equivalent to an initial conversion price of approximately $6.50 per share), subject to customary adjustments in certain circumstances.
The Company will not have the right to redeem the Notes prior to maturity, except to the extent necessary to preserve its status as a real estate investment trust, or REIT, for U.S. federal income tax purposes, the Company may redeem all or part of the Notes at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
Holders of Notes may require the Company to purchase their Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of purchase. In connection with certain corporate events, the Company will, under certain circumstances, increase the conversion rate for holders who elect to convert their Notes in connection with such corporate event.
In connection with the pricing of the Notes, the Company entered into capped call transactions with Credit Suisse Securities (USA) LLC and/or its affiliates. The capped call transactions are expected generally to reduce the potential dilution upon conversion of the Notes in the event that the market price per share of our common stock, as measured under the terms of the capped call transactions, is greater than the strike price of the capped call transactions, which initially corresponds to the conversion price of the Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes.
The Company intends to use a portion of the net proceeds of the offering to pay the cost of the capped call transactions. The Company intends to use the remainder of the net proceeds from the offering to finance the acquisition of mortgage assets including residential mortgage loans, non-Agency RMBS, Agency RMBS, Agency and non-Agency CMBS and other targeted assets, and for general corporate purposes such as repayment of outstanding indebtedness or to pay down other liabilities, working capital and for liquidity needs.
Credit Suisse is serving as the sole book-running manager for the offering.
The Notes will be offered under the Company’s existing shelf registration statement filed with the Securities and Exchange Commission. The offering of these Notes will be made only by means of a prospectus and a related prospectus supplement, a copy of which may be obtained by contacting:
Credit Suisse Securities (USA) LLC
Attn: Prospectus Department
Eleven Madison Avenue, 3rd Floor
New York, NY 10010
Or by email: firstname.lastname@example.org
This press release shall not constitute an offer to sell or the solicitation of an offer to buy the Notes or any other securities, nor shall there be any sale of such Notes or any other securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
About Chimera Investment Corporation
Chimera Investment Corporation is a publicly traded REIT that is primarily engaged in the business of investing directly or indirectly through our subsidiaries, on a leveraged basis, in a diversified portfolio of mortgage assets, including residential mortgage loans, Non-Agency RMBS, Agency CMBS, Agency RMBS, and other real estate related securities.
This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "target," "assume," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believe," "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 actual results to differ materially from expected results. For example, the fact that the offering has priced may imply that the offering will close, but the closing is subject to conditions customary in transactions of this type and may be delayed or may not occur at all. In addition, no assurance can be given that the offering discussed above will be consummated, the expected effect of any capped call transaction will occur as indicated or that the net proceeds of the offering will be used as stated.
Investors are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. You are urged to read the Section entitled "Risk Factors" in our most recent annual report on 10-K and other filings from time to time. All subsequent written and oral forward-looking statements concerning the Company or matters attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.
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Chimera Investment Corporation
Investor Relations, 888-895-6557