Annaly's $100 million perpetual convertible preferreds talked at 5.75%-6.25%, up 17.5% to 22.5%

By Kenneth Lim

Boston, April 3 - Annaly Mortgage Management Inc. plans to offer $100 million of perpetual convertible preferred stock talked at a dividend of 5.75% to 6.25% with an initial conversion premium between 17.5% and 22.5%, market sources said.

The preferreds are expected to be priced at $25 apiece, and the final terms are slated to be set on Thursday after the market closes. There is an over-allotment option for a further $15 million.

Merrill Lynch and Co. is the bookrunner of the off-the-shelf deal.

Annaly has no redemption option on the preferreds, but may force conversion after 2011 if its common stock price exceeds 130% of the conversion price.

The conversion ratios will be adjusted if Annaly's quarterly dividend exceeds the current 11 cents per common share. Preferred stock holders may also force Annaly to buy back the preferreds in cash under a change of control event.

Annaly is also planning a concurrent offering of common stock worth $300 million plus a further $45 million for over-allotments.

Annaly is a New York-based real estate investment trust that invests mainly in mortgage-backed securities. It plans to use proceeds from the stock and convertible offerings to buy mortgage-backed securities, and then borrow against the newly acquired securities to buy more mortgage-backed securities.

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