Impac Mortgage successfully completes tender offer for preferreds

By Angela McDaniels

Tacoma, Wash., June 29 - Impac Mortgage Holdings, Inc. accepted tenders and consents for 4,378,880 shares, or 67.7%, of its 9 3/8% series B cumulative redeemable preferred stock and 9 1/8% series C cumulative redeemable preferreds, according to a company news release.

A tender offer and consent solicitation for the preferreds began on May 29 and ended at 9 a.m. ET on June 29, extended from June 26.

The company previously warned that if the offer and solicitation were not successful, there could 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 offered $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 company, which announced plans for the tender on May 13, needed consents from holders of two-thirds of each series of preferreds. Holders could not tender without delivering consent.

In the consent solicitation, the company sought changes that will:

• Make the dividends on the preferreds non-cumulative;

• 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 also needed approval from holders of a majority of the company's common stock to make the changes. Stockholders granted their approval at a meeting on June 29.

Dividends

Because the offer and consent solicitation were successful, 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 filing with the Securities and Exchange Commission, Impac said it did not plan to pay future dividends on the preferreds if the offer and solicitation were not successfully completed.

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 was 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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