Annaly prices $100 million convertible preferreds at 6%, up 20%

New York, April 6 - Annaly Mortgage Management, Inc. priced $100 million of series B cumulative perpetual convertible preferred stock with a 6% dividend and a 20% initial conversion premium.

The deal came at the middle of talk, which had put the dividend at 5.75% to 6.25% and the initial conversion premium at between 17.5% and 22.5%.

Terms were set after the close Thursday along with a simultaneous upsized offering of 34.1 million shares at $11.75 per share for a total of $401 million. The stock sale had been planned at $300 million.

The convertibles have a $15 million greenshoe while the stock sale has an over-allotment option of 5.115 million shares.

Each $25 convertible preferred share converts into 1.7730 shares of common stock for a price of $14.10.

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 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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