Newcastle Investment's exchange offer for preferreds oversubscribed

By Angela McDaniels

Tacoma, Wash., March 23 - Newcastle Investment Corp. said more than 3.89 million shares of its preferred stock were tendered in the exchange offer that ended at midnight ET on March 22.

The company offered to exchange shares of its common stock and cash for up to 1,725,000 shares of its outstanding 9¾% series B cumulative redeemable preferred stock, up to 1,104,000 shares of its outstanding 8.05% series C cumulative redeemable preferreds and up to 1.38 million shares of its outstanding 8.375% series D cumulative redeemable preferred stock.

A total of 1,152,679 series B preferreds, 1,128,741 series C preferreds and 1,612,656 series D preferreds were tendered.

The company will accept all of the tendered series B preferreds for exchange. Because the number of series C preferreds and series D preferreds tendered exceeded their caps, those tendered preferreds will be accepted for exchange on a pro rata basis.

Holders will receive 2.5 shares of common stock and $4.40 in cash per preferred. In total, the company will issue 9,091,698 common shares and pay $16 million in cash.

The company will also pay accumulated dividends. For each $25.00 liquidation preference, the total cash payment is $7.82 for the series B preferreds, $7.22 for the series C preferreds and $7.34 for the series D preferreds.

Holders who did not tender will also receive accumulated dividends. The company said it will also set aside a sum sufficient for payment of accumulated dividends on the outstanding preferreds for the period from the exchange offer payment date through April 30.

Settlement is expected to occur March 25.

The offer began Feb. 22 and was conditioned on the receipt of at least 1.83 million preferreds.

As previously reported, the company began a tender offer for the preferreds on Nov. 18, but it failed to receive enough preferreds to satisfy the minimum tender condition.

In that offer, holders were offered $4.75 per preferred plus accumulated dividends.

D.F. King & Co. Inc. (800 628-8536) was the information agent for both offers.

Newcastle is a New York-based real estate investment and finance company.

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