By Kenneth Lim
Boston, April 7 - Annaly Mortgage Management Inc. priced its $100 million offering of perpetual convertible preferred stock at the middle of talk with a dividend of 6% and an initial conversion premium of 20%.
The preferreds, which were offered at par of $25, were priced Thursday after the market closed. Price talk guided for a dividend between 5.75% and 6.25%, and an initial conversion premium between 17.5% and 22.5%.
There is an over-allotment option of a further $15 million.
Merrill Lynch and Co. is the bookrunner of the off-the-shelf deal.
The conversion price of $14.10 is a 20% premium over the $11.75 for the simultaneous stock sale and an 18.69% premium over the close on Thursday.
Annaly has no redemption option on the preferreds, but may force conversion after 2011 if the 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 in a change of control event.
Annaly on Thursday also priced an upsized $401 million public offering of common stock at $11.75 per share, with a greenshoe for a further $60.1 million of shares.
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 borrowing against the newly acquired securities to buy more mortgage-backed securities.
| Issuer: | Annaly Mortgage Management Inc.
|
| Issue: | Series B convertible perpetual preferred stock
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| Bookrunner: | Merrill Lynch and Co.
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| Amount: | $100 million
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| Greenshoe: | $15 million
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| Maturity: | Perpetual
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| Dividend: | 6%
|
| Price: | Par of $25
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| Yield: | 6%
|
| Conversion premium: | 20%
|
| Conversion price: | $14.10
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| Conversion ratio: | 1.773
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| Company's conversion option: | Issuer may only force conversion after 5 years if common stock price exceeds 130% of conversion price
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| Dividend protection: | Conversion ratios will be adjusted if quarterly dividend exceeds 11 cents per common share.
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| Takeover protection: | Change of control put
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| Price talk: | 5.75%-6.25%, up 17.5%-22.5%
|
| Pricing date: | April 6 after the close
|
| Distribution: | Off shelf
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