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Redwood Trust (NYSE: RWT) has priced a $40 million reopening of its 7.75% convertible senior notes due 2027. The notes will be part of the same series as the $207,410,000 aggregate principal amount currently outstanding. The offering is expected to close on October 11, 2024. The conversion rate is 95.6823 shares of common stock per $1,000 principal amount, equivalent to a conversion price of approximately $10.45 per share, a 38% premium to the closing price on October 9, 2024.
Redwood estimates net proceeds of $38.2 million after deducting costs. The company intends to use the proceeds to repurchase a portion of its 5.75% exchangeable senior notes due 2025 and for general corporate purposes. The notes and any shares issuable upon conversion have not been registered under the Securities Act and can only be offered or sold pursuant to exemptions from registration requirements.
Redwood Trust (NYSE: RWT) ha fissato un riapertura da 40 milioni di dollari delle sue note senior convertibili al 7,75% in scadenza nel 2027. Queste note faranno parte della stessa serie del capitale in circolazione di 207.410.000 dollari. Si prevede che l’offerta si chiuda il 11 ottobre 2024. Il tasso di conversione è di 95,6823 azioni ordinarie per ogni 1.000 dollari di valore nominale, equivalente a un prezzo di conversione di circa 10,45 dollari per azione, con un premio del 38% rispetto al prezzo di chiusura del 9 ottobre 2024.
Redwood stima un provento netto di 38,2 milioni di dollari dopo aver dedotto i costi. L’azienda intende utilizzare i proventi per riacquistare una parte delle sue note senior scambiabili al 5,75% in scadenza nel 2025 e per scopi aziendali generali. Le note e le eventuali azioni emesse a seguito della conversione non sono state registrate ai sensi del Securities Act e possono essere offerte o vendute solo in base a esenzioni dai requisiti di registrazione.
Redwood Trust (NYSE: RWT) ha fijado un reapertura de 40 millones de dólares de sus bonos senior convertibles al 7.75% con vencimiento en 2027. Los bonos serán parte de la misma serie que el monto principal actualmente en circulación de 207,410,000 dólares. Se espera que la oferta cierre el 11 de octubre de 2024. La tasa de conversión es de 95.6823 acciones de acciones ordinarias por cada 1,000 dólares de monto principal, lo que equivale a un precio de conversión de aproximadamente 10.45 dólares por acción, un 38% por encima del precio de cierre del 9 de octubre de 2024.
Redwood estima un ingreso neto de 38.2 millones de dólares tras deducir costos. La compañía tiene la intención de utilizar los ingresos para recomprar una parte de sus bonos senior intercambiables al 5.75% con vencimiento en 2025 y para fines corporativos generales. Los bonos y las acciones que se puedan emitir al momento de la conversión no han sido registrados bajo la Ley de Valores y solo se pueden ofrecer o vender de conformidad con las exenciones de los requisitos de registro.
레드우드 트러스트 (NYSE: RWT)는 4000만 달러 규모의 재개에 대한 2027년 만기 7.75% 전환 가능 선순위 채권의 가격을 책정했습니다. 이 채권은 현재 유통되고 있는 2억 741만 달러의 전체 원금과 동일한 시리즈의 일환이 될 것입니다. 이 오퍼링은 2024년 10월 11일에 종료될 것으로 예상됩니다. 전환 비율은 1,000달러 원금당 95.6823주의 보통주로, 약 주당 10.45달러의 전환 가격에 해당하며, 이는 2024년 10월 9일 종가의 38% 프리미엄입니다.
레드우드는 비용을 공제한 후 3820만 달러의 순 수익을 추정하고 있습니다. 회사는 이 수익을 사용하여 2025년 만기 5.75% 교환 가능 선순위 채권의 일부를 재매입하고 일반 기업 용도로 사용할 계획입니다. 해당 채권과 전환 시 발행될 수 있는 주식은 증권법에 따라 등록되지 않았으며, 등록 요건에서 면제된 경우에만 제공 또는 판매될 수 있습니다.
Redwood Trust (NYSE: RWT) a fixé un rouverture de 40 millions de dollars de ses obligations convertibles seniors à 7,75 % arrivant à échéance en 2027. Ces obligations feront partie de la même série que le montant principal total en circulation de 207 410 000 dollars. La clôture de l’offre est prévue pour le 11 octobre 2024. Le taux de conversion est de 95,6823 actions ordinaires par 1 000 dollars de montant principal, ce qui équivaut à un prix de conversion d’environ 10,45 dollars par action, soit une prime de 38 % par rapport au prix de clôture du 9 octobre 2024.
Redwood estime des produits nets de 38,2 millions de dollars après déduction des coûts. La société prévoit d’utiliser ces produits pour racheter une partie de ses obligations seniors échangeables à 5,75 % arrivant à échéance en 2025 et pour des usages généraux d’entreprise. Les obligations et les actions pouvant être émises lors de la conversion n’ont pas été enregistrées en vertu de la loi sur les valeurs mobilières et ne peuvent être offertes ou vendues que conformément aux exemptions aux exigences d’enregistrement.
Redwood Trust (NYSE: RWT) hat eine Rückeröffnung von 40 Millionen US-Dollar seiner 7,75% wandelbaren Senioranleihen mit Fälligkeit 2027 festgelegt. Die Anleihen werden Teil derselben Serie sein wie der derzeit ausstehende Gesamtnennbetrag von 207.410.000 US-Dollar. Der Abschluss der Emission wird für den 11. Oktober 2024 erwartet. Der Umwandlungssatz beträgt 95,6823 Aktien pro 1.000 US-Dollar Nennbetrag, was einem Umwandlungspreis von etwa 10,45 US-Dollar pro Aktie entspricht und einem Aufschlag von 38 % gegenüber dem Schlusskurs am 9. Oktober 2024.
Redwood schätzt Nettoerlöse von 38,2 Millionen US-Dollar nach Abzug der Kosten. Das Unternehmen beabsichtigt, die Erlöse zu nutzen, um einen Teil seiner 5,75% umwandelbaren Senioranleihen mit Fälligkeit 2025 zurückzukaufen und für allgemeine Unternehmenszwecke zu verwenden. Die Anleihen und alle im Rahmen der Umwandlung auszugebenden Aktien wurden nicht gemäß dem Wertpapiergesetz registriert und dürfen nur aufgrund von Ausnahmen von den Registrierungspflichten angeboten oder verkauft werden.
Positive
- Raised approximately $40 million through convertible senior notes offering
- Conversion price of $10.45 per share represents a 38% premium to current stock price
- Net proceeds of $38.2 million to be used for debt repurchase and general corporate purposes
Negative
- Potential dilution for existing shareholders if notes are converted to common stock
- Increased debt burden with 7.75% interest rate
Insights
Redwood Trust’s pricing of $40 million in convertible senior notes is a strategic move to refinance existing debt. The 7.75% coupon rate is relatively high, reflecting current market conditions and the company’s credit profile. The conversion price of $10.45 per share, a 38% premium to the current stock price, balances the potential dilution risk with an attractive conversion option for investors.
The net proceeds of approximately $38.2 million will primarily be used to repurchase a portion of the 5.75% exchangeable senior notes due 2025. This debt management strategy could potentially reduce interest expenses and extend maturity dates, improving the company’s financial flexibility. However, the higher interest rate on the new notes compared to the 2025 notes suggests an increased cost of capital.
The additional provisions, such as the company’s right to redeem the notes to preserve REIT status and the conditional redemption option after June 2025, provide Redwood with some flexibility in managing its capital structure. Investors should monitor how effectively the company utilizes these proceeds and the impact on its overall debt profile and interest coverage ratios.
MILL VALLEY, Calif.–(BUSINESS WIRE)– Redwood Trust, Inc. (NYSE: RWT; “Redwood” or the “Company”) today announced that it priced approximately $40 million aggregate principal amount of its 7.75% convertible senior notes due 2027 (the “Notes”) in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Notes will be issued as a reopening of, and will be part of the same series as, the 7.75% convertible senior notes due 2027 that the Company originally issued in June 2022 (the “Initial Notes”), of which $207,410,000 aggregate principal amount is currently outstanding. While the Notes will initially trade under a Rule 144A CUSIP number, the Company expects that once de-legended, the Notes will trade with the same CUSIP number as the Initial Notes. The offering is expected to close on October 11, 2024, subject to the satisfaction of certain closing conditions.
Interest on the Notes is payable semi-annually in arrears on June 15 and December 15 of each year; the Notes will mature on June 15, 2027, unless earlier repurchased, redeemed or converted. Upon conversion, holders of the Notes will receive shares of Redwood’s common stock, together with cash in lieu of any fractional share. If Redwood undergoes a “fundamental change” (as defined in the indenture governing the Notes), subject to certain conditions, holders of the Notes may require Redwood to repurchase all or part of their Notes for cash in an amount equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any.
Before March 15, 2027, holders have the right to convert their Notes only upon the occurrence of certain events. From and after March 15, 2027, holders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. Redwood has the right to elect to settle conversions either entirely in cash or in a combination of cash and shares of its common stock. However, upon conversion of any Notes, the conversion value, which will be determined over a period of multiple trading days, will be paid in cash up to at least the principal amount of the Notes being converted. Any conversions of Notes into shares of Redwood common stock will be subject to certain ownership limitations set forth in Redwood’s charter documents. The conversion rate is 95.6823 shares of common stock per $1,000 principal amount of Notes, equivalent to a conversion price of approximately $10.45 per share, which is an approximately 38% premium to the closing price of Redwood’s common stock on October 9, 2024. The conversion rate and conversion price are subject to customary anti-dilution adjustments.
Redwood has the right to redeem the Notes, in whole or in part, at its option at any time prior to maturity to the extent necessary to preserve its status as a real estate investment trust for U.S. federal income tax purposes. In addition, subject to certain limitations, Redwood has the right to redeem the Notes, in whole or in part, at its option on or after June 16, 2025, but only if the last reported sale price per share of Redwood’s common stock exceeds 130% of the conversion price for a specified period of time. The redemption price for any Note called for redemption will be a cash amount equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any.
Redwood estimates that the net proceeds it will receive from the offering will be approximately $38.2 million, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by Redwood. Redwood intends to use the net proceeds from the offering to repurchase a portion of the currently outstanding 5.75% exchangeable senior notes due 2025 previously issued by one of its subsidiaries (the “2025 Notes”) in privately negotiated transactions from time to time. Redwood intends to use the remainder of the net proceeds, if any, for general corporate purposes.
The terms of the 2025 Notes repurchases will depend on several factors, including the market price of Redwood’s common stock and the trading price of the 2025 Notes at the time of each such repurchase of the 2025 Notes. If, for any reason, Redwood does not use the net proceeds from this offering to repurchase a portion of the 2025 Notes, it would expect to use the net proceeds for general corporate purposes.
The offer and sale of the Notes and any shares of common stock issuable upon conversion of the Notes have not been, and will not be, registered under the Securities Act or any other securities laws, and the Notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. This press release does not constitute an offer to repurchase any 2025 Notes or to sell, or the solicitation of an offer to buy, the Notes or any shares of common stock issuable upon conversion of the Notes, nor will there be any sale of the Notes or any such shares, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful.
About Redwood Trust
Redwood Trust, Inc. (NYSE: RWT) is a specialty finance company focused on several distinct areas of housing credit where we provide liquidity to growing segments of the U.S. housing market not well served by government programs. We deliver customized housing credit investments to a diverse mix of investors through our best-in-class securitization platforms, whole-loan distribution activities, and our publicly traded shares. We operate our business in three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking and Investment Portfolio. Through RWT Horizons®, our venture investing initiative, we invest in early-stage companies that have a direct nexus to our operating platforms. Additionally, through Aspire, our home equity investment (“HEI”) platform, we directly originate HEI to homeowners. Our goal is to provide attractive returns to shareholders through a stable and growing stream of earnings and dividends, capital appreciation, and a commitment to technological innovation that facilitates risk-minded scale. Redwood Trust is internally managed and structured as a real estate investment trust (“REIT”) for tax purposes.
CAUTIONARY STATEMENT: This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, such as statements related to the offering and the expected use of the net proceeds. Forward-looking statements involve numerous risks and uncertainties. Redwood’s actual results may differ materially from those projected, and Redwood cautions investors not to place undue reliance on the forward-looking statements contained in this release. Forward-looking statements are not historical in nature and can be identified by words such as “anticipate,” “estimate,” “will,” “should,” “expect,” “believe,” “intend,” “seek,” “plan,” and similar expressions or their negative forms, or by references to strategy, plans, or intentions. These forward-looking statements are subject to risks and uncertainties, including, among other things, those described in Redwood’s filings with the Securities and Exchange Commission. Redwood undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241009775462/en/
Kaitlyn Mauritz
Head of Investor Relations
Phone: 866-269-4976
Email: investorrelations@redwoodtrust.com
Source: Redwood Trust, Inc.
FAQ
What is the conversion rate for Redwood Trust’s (RWT) new convertible notes?
The conversion rate for Redwood Trust’s (RWT) new convertible notes is 95.6823 shares of common stock per $1,000 principal amount, equivalent to a conversion price of approximately $10.45 per share.
When will Redwood Trust’s (RWT) new convertible notes mature?
Redwood Trust’s (RWT) new convertible notes will mature on June 15, 2027, unless earlier repurchased, redeemed, or converted.
How much did Redwood Trust (RWT) raise in the convertible notes offering?
Redwood Trust (RWT) priced approximately $40 million aggregate principal amount of its 7.75% convertible senior notes due 2027 in this offering.
How does Redwood Trust (RWT) plan to use the proceeds from the convertible notes offering?
Redwood Trust (RWT) intends to use the net proceeds to repurchase a portion of its 5.75% exchangeable senior notes due 2025 and for general corporate purposes.
