NovaStar gets needed consents in offers for 8.9% series C preferreds, 9% series D1 convertibles

By Jennifer Chiou

New York, June 24 - NovaStar Financial, Inc. announced the receipt of the necessary consents in the exchange offer for its 8.9% series C cumulative redeemable preferred stock and its 9% series D1 mandatory convertible preferred stock.

The offers ended at 5 p.m. ET on June 23. They launched on May 4.

According to a company news release, all conditions for the exchange have been satisfied.

In the completed offer for the 9% convertibles, NovaStar issued 37,162,000 new shares and $1,377,000 in cash as part of its plan of recapitalization.

The company offered 43,823,600 newly issued shares plus accrued dividends and $1,623,000 in cash in exchange for the 8.9% preferreds. It received participation from holders of over two-thirds of the securities, the release stated.

As reported, those opting to tender their series C preferreds could elect to receive either:

• Three new shares and $2.00 in cash per preferred; or

• 19 new shares.

The Kansas City, Mo., specialty finance company said it was looking to improve its capital structure and to eliminate its obligation to future preferred dividends and the preferred liquidating preference when the offers launched.

As of April 15, there were accrued dividends of $23.6 million and $32.3 million on the series C and series D preferreds, respectively, that were yet to be paid.

As of the same date, the total liquidating preference of the series C preferreds was $74.8 million while the series D securities stood at $52.5 million.

NovaStar also obtained shareholder approval of certain amendments to the company's charter.

Questions may be directed to Georgeson Inc. (212 440-9800 for banks and brokers or 866 695-6074).

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