NovaStar raises $150 million, announces stock split

By Lisa Kerner

Charlotte, N.C., July 16 - Affiliates of MassMutual Capital Partners LLC, as well as funds managed by Jefferies Capital Partners IV LLC, purchased $48.8 million of NovaStar Financial, Inc.'s convertible preferred stock and committed to purchase up to $101.2 million of any unsubscribed shares of an upcoming shareholder rights offering to raise $150 million for the company.

NovaStar entered into a definitive securities purchase agreement, a standby purchase agreement and other agreements with MassMutual and Jefferies, according to a company news release.

As part of this strategic transaction, NovaStar's board will end its process to explore alternatives for the company and new investors will nominate members to be added to NovaStar's board.

MassMutual and Jefferies agreed to backstop the rights offering.

NovaStar also announced a 4 for 1 reverse stock split of its common stock.

"These steps will strengthen our financial position and establish NovaStar as one of the leading independent lenders and portfolio managers in the nonconforming mortgage sector," NovaStar chairman and chief executive officer Scott Hartman said in a company news release.

"Our review of strategic alternatives looked at many options, and the board concluded that the best way to maximize long-term shareholder value is to move forward with a stronger balance sheet and a commitment to continuing to meet the mortgage needs of America's homeowners."

NovaStar is a specialty finance company based in Kansas City, Mo.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.