Item 1.01. Entry into a Material Definitive Agreement.
On September 13, 2018, Chimera Investment Corporation (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, UBS Securities LLC, Wells Fargo Securities, LLC and Keefe, Bruyette & Woods, Inc., as representatives of the several underwriters named therein (collectively, the “Underwriters”), pursuant to which the Company agreed to offer and sell 10,000,000 shares of its 7.75% Series CFixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series C Preferred Stock”), at a public offering price of $25.00 per share (the “Preferred Stock Offering”). The Underwriters were granted an option to purchase up to an additional 1,500,000 shares of Series C Preferred Stock to cover over-allotments, if any, bringing the total number of shares of Series C Preferred Stock that may be issued in the Preferred Stock Offering to 11,500,000 shares of Series C Preferred Stock. In the Underwriting Agreement, the Company made certain customary representations, warranties and covenants and agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended.
The Preferred Stock Offering is expected to close on September 20, 2018, subject to customary closing conditions, and will result in estimated net proceeds, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, of approximately $241.9 million ($278.2 million if the Underwriters exercise their over-allotment option in full).
This description of the material terms of the Underwriting Agreement is qualified in its entirety by reference to the Underwriting Agreement, which is filed as Exhibit 1.1 to this Current Report on Form8-K and is hereby incorporated by reference into this Item 1.01.
Item 3.03. Material Modifications to Rights of Security Holders.
On September 18, 2018, the Company filed, with the State Department of Assessments and Taxation of the State of Maryland, Articles Supplementary (the “Articles Supplementary”) to the Articles of Amendment and Restatement of the Company classifying and designating 11,500,000 shares of the Company’s authorized preferred stock, par value $0.01 per share, as the Series C Preferred Stock, with the powers, designations, preferences and other rights as set forth therein.
The Articles Supplementary, among other things, provide that the Company will pay cumulative cash dividends on the Series C Preferred Stock when and as declared by the Company’s Board of Directors. The initial dividend rate for the Series C Preferred Stock, from and including September 20, 2018, to but not including September 30, 2025, will be equal to 7.75% per annum of the $25.00 liquidation preference per share (equivalent to the fixed annual rate of $1.9375 per share). On and after September 30, 2025, dividends on the Series C Preferred Stock will accumulate at a percentage of the $25.00 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 4.743% per annum. Dividends on the Series C Preferred Stock will be payable quarterly in arrears on the 30th day of each March, June, September and December, when and as declared, beginning on December 30, 2018 (provided that if any dividend payment date is not a business day, then the dividend which would otherwise have been payable on that dividend payment date may be paid on the next succeeding business day).
The Series C Preferred Stock ranks senior to the Company’s common stock, $0.01 par value per share (“Common Stock”), with respect to the payment of dividends and rights upon the voluntary or involuntary liquidation, dissolution or winding up of the Company.
The Series C Preferred Stock will not be redeemable before September 30, 2025, except under certain limited circumstances intended to preserve the Company’s qualification as a real estate investment trust (“REIT”) and except upon the occurrence of a Change of Control (as defined in the Articles Supplementary). On or after September 30, 2025, the Company may, at its option, redeem, in whole or in part, at any time or from time to time, the Series C Preferred Stock at redemption price of $25.00 per share, plus any accumulated and unpaid dividends thereon (whether or not authorized or declared) to, but excluding, the redemption date. In addition, upon the occurrence of a Change of Control, the Company may, at its option, redeem some or all of the shares of Series C Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control occurred at $25.00 per share plus any accumulated and unpaid dividends to, but excluding, the redemption date. The Series C Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by the Company or converted into Common Stock in connection with a Change of Control by the holders of Series C Preferred Stock.
