Impac Mortgage starts tender, consent solicitation for preferreds

By Jennifer Chiou

New York, May 29 - Impac Mortgage Holdings, Inc. announced the launch of a tender offer and consent solicitation for its 9 3/8% series B cumulative redeemable preferred stock and 9 1/8% series C cumulative redeemable preferreds.

The company previously warned that if the offer and solicitation are not successful, there may be a near-term negative effect on its business, results of operations and financial position, including the potential inability to satisfy its liabilities and the cash requirements related to long-term dividend and interest obligations.

Impac said it is offering $0.29297 for each series B preferred and $0.28516 for each series C preferred. The figure is equal to one-half of a quarterly dividend payment.

The offer is set to close at 9 a.m. ET on June 26.

The company, which announced plans for the tender on May 13, is seeking consents from holders of two-thirds of each series of preferreds. Holders may not tender without delivering consent.

In the consent solicitation, the company is seeking changes that will:

• Make the dividends on the preferreds noncumulative;

• Make the preferreds callable prior to the fifth anniversary of their issuance;

• Allow the company to redeem less than all of the outstanding preferreds if full cumulative dividends have not been paid;

• Remove the requirement that it pay accrued dividends upon redemption or liquidation;

• Eliminate any premiums payable upon the liquidation, dissolution or winding up of the company;

• Reduce the number of series B preferreds to 2 million from 7.5 million;

• Eliminate the provisions that prevent the payment of dividends on junior stock and the repurchase of junior or parity stock if full cumulative dividends are not paid;

• Eliminate the right of preferred holders to elect two directors if dividends are in arrears for six quarterly periods; and

• Eliminate the right of preferred holders to consent to or approve the authorization or issuance of preferred stock that is senior to the preferreds.

Impac is also seeking approval from holders of a majority of the company's common stock.

As already noted, if the offer and consent solicitation are successfully completed, Impac will also pay all accumulated dividends on the preferreds and all unpaid deferred amounts on its trust preferred securities. The accumulated unpaid dividends are $1.17 for each series B preferred and $1.14 for each series C preferred.

Impac did not pay dividends on the preferreds for the fourth quarter of 2008 or first quarter of 2009 and has deferred payments on the trust preferreds since December.

The company said on March 31 that it would not be paying dividends "indefinitely" on the preferreds and would instead let the dividends accumulate.

In a prior SEC filing, Impac said it does not plan to pay future dividends on the preferreds if the offer and solicitation are not successfully completed. It noted, however, that it may not be able to raise additional capital if it cannot pay dividends on the preferreds and, as a result, may not be able to rebuild its business and may be required to change its current plan of operations, which could include a wind-down of the company.

The accumulated dividends on the preferreds totaled $7.4 million as of March 31, and the unpaid deferred amounts on the trust preferreds totaled $518,500, including interest, as of April 30.

The information agent is D.F. King & Co., Inc. (800 269-6427).

Impac Mortgage is primarily invested in non-conforming mortgage loans and, to a lesser extent, small balance commercial and multi-family loans. The company is based in Irvine, Calif.

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