Two Harbors to take over CYS’ $275 million 7.75%, 7.5% preferreds

By Susanna Moon

Chicago, April 26 – CYS Investments Inc. said that its planned merger will result in Two Harbors Investment Corp. assuming its $75 million 7.75% series A cumulative redeemable preferred stock and $200 million 7.5% series B cumulative redeemable preferred stock.

Two Harbors, a hybrid mortgage real estate investment trust, has entered into a definitive merger agreement to acquire CYS Investments, according to a company announcement.

In connection with the merger, CYS stockholders will exchange their shares for newly issued shares of Two Harbors common stock as well as aggregate cash amount of $15 million. The number of Two Harbors shares issued will be based on an exchange ratio to be determined by dividing 96.75% of CYS’ adjusted book value per share by 94.2% of Two Harbors’ adjusted book value per share.

For example, assuming the merger occurs and the exchange ratio was based on March 31 adjusted book value per share, CYS stockholders would receive $7.79 of combined cash and stock per CYS share, which represents a premium of about 17.7% over the CYS closing price per share on April 25.

CYS is a Waltham, Mass.-based real estate investment trust.

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