Published on 1/10/2023 in the Prospect News Preferred Stock Daily.
New Issue: Redwood Trust prices $65 million 10% fixed-rate reset cumulative preferreds
By Wendy Van Sickle
Columbus, Ohio, Jan. 10 – Redwood Trust, Inc. priced $65 million, or 2.6 million shares, of 10% fixed-rate reset series A cumulative redeemable preferred shares (Egan-Jones: BBB-) at par with a liquidation preference of $25 apiece, according to an FWP filing with the Securities and Exchange Commission.
There is a $9.75 million greenshoe.
The preferreds are redeemable at par on or after April 15, 2028, on which date the dividend will reset to a rate equal to the five-year U.S. Treasury rate plus 627.8 basis points.
Change-of-control protections for investors include a par redemption or the right to convert the preferred stock into shares.
Redwood will apply to list the preferreds under the symbol “RWTPrA” on the New York Stock Exchange.
Morgan Stanley & Co. LLC is leading the sale. J.P. Morgan Securities LLC, RBC Capital Markets, LLC, UBS Securities LLC, Wells Fargo Securities, LLC, Goldman Sachs & Co. LLC, Keefe, Bruyette & Woods, Inc., Piper Sandler & Co. and Raymond James & Associates, Inc. are the joint bookrunners.
Proceeds will be used to repurchase or repay all or a portion of several convertible bonds, including the 4.75% convertibles due 2023, the 5.625% convertibles due 2024, the 5.75% exchangeable senior notes due 2025 or the 7.75% convertible senior notes due 2027.
Redwood Trust is a Mill Valley, Calif.-based specialty finance company focused on several distinct areas of housing credit.
| Issuer: | Redwood Trust, Inc.
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| Amount: | $65 million, or 2.6 million shares
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| Greenshoe: | $9.75 million, or 390,000 shares
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| Issue: | Series A fixed-rate reset cumulative redeemable preferred shares
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| Maturity: | Perpetual
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| Bookrunners: | Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, RBC Capital Markets, LLC, UBS Securities LLC, Wells Fargo Securities, LLC, Goldman Sachs & Co. LLC, Keefe, Bruyette & Woods, Inc., Piper Sandler & Co. and Raymond James & Associates, Inc.
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| Co-managers: | Barclays, BTIG, LLC JMP Securities LLC
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| Trustee: | Wilmington Trust, NA
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| Counsel to issuer: | Latham & Watkins LLP and Venable LLP
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| Counsel to underwriters: | Clifford Chance US LLP
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| Dividend: | 10% until April 15, 2028, then Treasuries plus 627.8 bps
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| Price: | Par of $25.00
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| Yield: | 10%
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| Call options: | On or after April 15, 2028
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| Pricing date: | Jan. 10
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| Settlement date: | Jan. 18
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| Rating: | Egan-Jones: BBB-
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| Symbol: | NYSE: RWTPrA
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| Cusip: | 758075808
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