EXHIBIT 99
[LETTERHEAD OF IMPAC MORTGAGE HOLDINGS, INC.]
Impac Mortgage Holdings, Inc.
Announces Delay of Payment Date of Previously Announced Third Quarter
1998 Dividend; Expected Third Quarter 1998 Loss, Reduced Earnings
Expectations for Fourth Quarter 1998 and No Further Dividends for
the Remainder of 1998; Adoption of a Stock Repurchase Plan;
Adoption of a Stockholder Rights Plan
Santa Ana Heights, California; October 8, 1998 -- Impac Mortgage
Holdings, Inc. (Amex-IMH) today made several significant announcements.
Delay of Payment Date of Third Quarter 1998 Dividend
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The Company today announced a delay of the payment date of its previously
announced third quarter 1998 dividend to January 6, 1999. The Board of Directors
reserves the right to accelerate that payment date in its sole discretion. The
amount of the dividend ($.49 per share) and the record date for receipt of the
dividend (October 9, 1998) are not affected by the delay. As a result of the
payment delay, the Company will pay interest, at a rate of 4% per annum, on the
amount due calculated from the previously announced payment date (October 26,
1998) through the date of actual payment. The interest may be paid in the form
of cash or shares of the Company's common stock.
Joseph R. Tomkinson, Chief Executive Officer of IMH stated, "Due to the
turmoil in the securitization markets and the tightening of pricing on whole
loan sales, we feel compelled to take positive steps to improve profitability
and liquidity. We intend to reduce our exposure to tightening of pricing in the
secondary market and improve profitability by modifying our loan origination
strategy. We intend to raise the pricing on the origination of our residential
mortgages which will improve our margins. While this decision will result in
lower origination volume in the fourth quarter of 1998 and possibly thereafter,
we feel we will achieve better results on the subsequent resale of these loans.
To improve our liquidity we are taking cost-cutting measures including
negotiating with our institutional lenders to improve credit terms, liquidating
selected assets and delaying the date of payment of the dividend."
"We have no intention to go out of business or declare bankruptcy," stated
Mr. Tomkinson. "We believe that the stock market is adversely reacting to the
financial sectors in general and to mortgage companies in particular in part
due to the bankruptcy announcements of other substantial lenders. We believe the
residential market remains strong and that the recent turmoil in the credit
markets is a short-term issue. While the recent turn of events is disappointing,
we believe the Company remains positioned for long-term growth which will
ultimately benefit our stockholders. We feel we need to take these actions to
secure long-term viability so long as the secondary and stock markets remain
unstable. We will continue to pursue avenues such as substantial whole loan
sales, creative securitization vehicles and selected asset sales to boost
cash-flow. We believe the
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retention of capital not only aids in the financial welfare of the Company in
the short-run but positions us to take advantage of opportunities to reinvest in
higher yielding long-term assets."
Expected Third Quarter 1998 Loss, Reduced Earnings Expectations for the Fourth
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Quarter 1998 and no Further Dividends for the Remainder of 1998
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The Company announced that it expects to record a loss for its third
quarter ended September 30, 1998, projected earnings for the fourth quarter of
1998 will be lower than previously expected and that it will pay no further
dividend for 1998 other than the previously announced third quarter 1998
dividend.
Third quarter 1998 results will be impaired by a number of market factors,
including the recent decline in the market price of Impac Commercial Holdings,
Inc. ("ICH") common stock. The Company currently owns 9.8% of ICH's common stock
and 100% of common class A non-voting. The decline in the market price of ICH
common stock below book value has an adverse impact on the Company's income
statement. Reported results are also affected by the fact that the Company holds
certain high loan-to-value ratio and sub-prime loans held for sale and
subordinate securities on its books at the lower cost or market, the market
value of which has fallen significantly during the third and fourth quarters of
1998. Each of these adjustments are non-cash accounting charges. In addition,
operating results for the third quarter are expected to be affected by the
anticipated liquidation of certain assets in the fourth quarter of 1998, which
will increase liquidity. Due to adverse market conditions, such sales may take
place at a loss, a portion of which will be recorded in the third quarter.
Based on the closing sales price of ICH on October 7, 1998 and prevailing
conditions in the secondary market, the Company expects to record charges to
earnings that will result in a net loss between approximately $17.2 million to
$22.9 million or approximately $0.70 to $0.93 per share of common stock on a
diluted basis for the third quarter of 1998. This is largely the result of the
aggregate amount of the referenced non-cash accounting charges which are
expected to be between approximately $26.8 million and $32.5 million or
approximately $1.09 to $1.32 per share of common stock on a diluted basis.
Fourth quarter 1998 operating results are likely to be adversely affected
by the aforementioned liquidation of assets, the lack of stability in the
securitization markets, tightening of pricing on whole loan sales and the
decrease in the value of the Company's equity holdings in ICH.
Furthermore, in an effort to boost liquidity for long-term growth, the
Company announced that it does not expect to make a further dividend payment in
1998, other than the previously announced third quarter 1998 dividend. Other
than the delayed third quarter 1998 dividend, the Company is not required under
the
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rules governing real estate investment trusts to make a further dividend payment
for 1998.
Mr. Tomkinson stated, "As we have said, we decided to delay the third
quarter dividend payment date to boost liquidity. Other than the previously
announced third quarter 1998 dividend, we do not feel that paying additional
dividends for 1998 is wise because our goal is to position the Company for
long-term growth. We feel that preserving capital is in the Company's and our
stockholders best long-term interests."
Adoption of a Stock Repurchase Plan
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The Company today announced that its Board of Directors has authorized the
Company to repurchase up to $5.0 million worth of the Company's common stock,
$.01 par value, in open market purchases from time to time in the discretion of
the Company's management; the timing and extent of the repurchases will depend
on market conditions.
The Company intends to effect such repurchases, if any, in compliance with
the Rule 10b-18 under the Securities Exchange Act of 1934. The acquired shares
will be canceled.
"We believe that the true value of the Company is not reflected in the
current market price of our common stock," said Mr. Tomkinson. "This common
stock repurchase plan reflects our confidence in the long-term growth potential
of our Company."
Adoption of a Stockholder Rights Plan
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The Company today announced that its board of directors has adopted a
Stockholder Rights Plan in which Preferred Stock Purchase Rights will be
distributed as a dividend at the rate of one Right for each outstanding share of
common stock.
Mr. Tomkinson stated, "The Rights are designed to assure that all of the
Company stockholders receive fair and equal treatment in the event of any
proposed takeover of the Company and to guard against partial tender offers,
squeeze-outs, open-market accumulations and other abusive tactics to gain
control of the Company without paying all stockholders a control premium."
Mr. Tomkinson also stated "that the Company is not aware of any current
intent to acquire a sufficient number of shares of the Company's common stock to
trigger distribution of the Rights."
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The Rights will be attached to the Company's common stock. The Rights will
be exercisable and trade separately only in the event that a person or group
acquires or announces the intent to acquire 10 percent or more of the Company's
common stock. Each Right will entitle stockholders to buy one-hundredth of a
share of a new series of junior participating preferred stock at an exercise
price of $10.00
If the Company is acquired in a merger or other transaction after a person
has acquired 10 percent or more of Company outstanding common stock, each Right
will entitle the stockholder to purchase, at the Right's then-current exercise
price, a number of the acquiring Company's common shares having a market value
of twice such price.
In addition, if a person or group acquires 10 percent or more of the
Company's common stock, each Right will entitle the stockholder (other than the
acquiring person) to purchase, at the Right's then-current exercise price, a
number of shares of the Company's common stock having a market value of twice
such price.
Following the acquisition by a person of 10 percent or more of the
Company's common stock and before an acquisition of 50 percent or more of the
common stock, the Board of Directors may exchange the Rights (other than the
Rights owned by such person) at an exchange ratio of one share of common stock
per Right.
Before a person or group acquires beneficial ownership of 10 percent or
more of the Company's common stock, the Rights are redeemable for $.0001 per
right at the option of the Board of Directors.
The dividend distribution will be made on October 19, 1998, payable to
stockholders on record on that date. The Rights will expire on October 19, 2008.
The Rights disbtribution is not taxable to stockholders.
The Rights are intended to enable all the Company stockholders to realize
the long-term value of their investment in the Company. They will not prevent a
takeover but should encourage anyone seeking to acquire the Company to negotiate
with the Board of Directors prior to attempting a takeover.
The Company is a mortgage loan investment company that invests primarily in
non-conforming, high-yielding mortgages which, together with its subsidiaries
and related companies, operates three businesses. The Company's first business
is to act as a long-term investor of primarily non-conforming residential
mortgage loans and mortgage-backed securities secured by or representing
interests in such loans. The second business is Impac Funding Corporation
("IFC"), which purchases primarily non-conforming mortgage loans and to a lessor
extent, second mortgages, from a
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network of third party correspondent loan originators and subsequently
securitizes or sells such loans to permanent investors. As the Company's third
business, Impac Warehouse Lending Group, a wholly owned subsidiary of the
Company, focuses on providing warehouse and reverse-repurchase financing to
approved mortgage banks, most of which are correspondents of IFC.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, which can be identified
by the use of forward-looking terminology such as "may", "will", "intend",
"should", "expect", "anticipate", "estimate", or "continue" or the negatives
thereof or other comparable terminology. The Company's actual results could
differ materially from those anticipate in such forward-looking statements as a
result of certain factors. The financial information presented in this release
pertaining to actual results should not be taken to predict future earnings, as
the Company may not experience similar earnings in future periods.
For further information, please contact the Company's investor relations
department:
INVESTOR RELATIONS:
Thom Singha
Tania Jernigan
714-438-2100
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