Anthracite issues notes in exchange for $25 million trust preferreds

By Angela McDaniels

Tacoma, Wash., July 23 - Anthracite Capital, Inc. issued $31.25 million principal amount of junior subordinated notes due Oct. 30, 2035 to Taberna Preferred Funding II, Ltd. in exchange for $25 million liquidation amount of trust preferred securities issued by Anthracite Capital Trust I on Wednesday, according to an 8-K filing with the Securities and Exchange Commission.

The notes carry a fixed coupon of 0.75% per year until the earlier of July 22, 2013 and the date on which all of the loans under the company's senior secured credit facilities with Bank of America, Deutsche Bank and Morgan Stanley are fully amortized. After that time, the notes will bear interest at the same rate as the exchanged securities.

Interest is payable quarterly.

While the coupon remains 0.75%, the company is subject to limitations on its ability to pay cash dividends on its common stock or preferred stock; to redeem, purchase or acquire any equity interests; and to issue or otherwise incur new debt other than trade debt, similar debt incurred in the ordinary course of business or debt in exchange for or to provide the funds necessary to repurchase, redeem, refinance or satisfy the company's existing secured and senior unsecured debt.

In addition, the cure period during this time for a default in the payment of interest when due is three days.

The notes are contractually senior to the company's remaining junior subordinated notes. They otherwise generally have the same terms, including maturity date, as the exchanged securities.

Anthracite Capital is a New York specialty finance company focused on investments in high-yield commercial real estate loans and related securities.

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