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Impac Mortgage canceled $28.5 million trust preferreds, issued 2% notes for $51.3 million last year
By Jennifer Chiou
New York, March 15 - Impac Mortgage Holdings, Inc. announced that it purchased and canceled a total of $28.5 million of its trust preferred securities for $4.3 million in 2009.
In addition, the company exchanged $51.3 million of the trust preferred securities for $62 million of junior subordinated notes.
Under the terms of the exchange, the interest rate for each note was reduced to 2% from the original 8.01% through 2013, with increases of 1% per year through 2017. At that point, the notes will bear interest at Libor plus 375 basis points.
According to a company news release, through the end of last year, it successfully settled or restructured $87.8 million of the original $96.3 million of trust preferred securities, reducing its annual interest expense obligation to roughly $2 million from $7.8 million.
Also in 2009, the company purchased 4.4 million of its 9 3/8% series B cumulative redeemable preferred stock and 9 1/8% series C cumulative redeemable preferreds, representing a liquidation value of $109.5 million, for $1.3 million plus $7.4 million in accumulated dividends.
During the company's June 2009 offer and solicitation for the preferred stock, it warned that if it was 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 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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