Western Asset Mortgage Capital Corporation (NYSE: WMC) (the "Company") today announced the pricing of its previously announced public offering of $75 million aggregate principal amount of its 6.75% Convertible Senior Notes due 2024 (the "Notes"). The Company has granted the underwriter a 30-day option to purchase up to $11.25 million aggregate principal amount of additional Notes on the same terms and conditions to cover over-allotments, if any. The offering is subject to customary closing conditions and is expected to close on or about September 14, 2021, subject to satisfaction of customary closing conditions.
The Notes will bear interest at a rate equal to 6.75% per year, payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2022 and will mature on September 15, 2024, unless earlier converted, redeemed or repurchased. The Company will have the right to redeem the Notes on or after June 15, 2024. Prior to June 15, 2024, the Notes will be convertible only upon certain circumstances and during certain periods, and thereafter will be convertible at any time prior to the close of business on the second business day immediately preceding the maturity date of the Notes. The Notes will be convertible into cash, shares of the Company's common stock or a combination thereof, at the Company's sole election. The conversion rate will initially equal 337.9520 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $2.96 per share of common stock, representing an approximate 10% conversion premium based on the closing price of the Company's common stock of $2.69 per share on September 9, 2021.
The Company intends to use approximately $72.5 million of the net proceeds from this offering, together with approximately $27.8 million of cash on hand, to repurchase approximately $100.3 million of its outstanding 6.75% Convertible Senior Notes due October 1, 2022 and the remainder, if any, of the net proceeds for general corporate purposes, which may include debt repurchases.
JMP Securities is the sole underwriter for the offering.
The offering is being made pursuant to an effective shelf registration statement, including a prospectus and related prospectus supplement, filed by the Company with the Securities and Exchange Commission ("SEC"). These documents may be obtained for free by visiting the SEC's website at http://www.sec.gov. Alternatively, a copy of the prospectus supplement and accompanying prospectus related to the offering may be obtained, when available, by contacting JMP Securities, 600 Montgomery Street, 10th Floor, San Francisco, CA 94111, Attention: Prospectus Department, or by calling (415) 835-8985.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor will there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
ABOUT WESTERN ASSET MORTGAGE CAPITAL CORPORATION
Western Asset Mortgage Capital Corporation is a real estate investment trust that invests in, acquires and manages a diverse portfolio of assets consisting of Residential Whole Loans, Commercial Loans, Non-Agency CMBS, Non-Agency RMBS, GSE Risk Transfer Securities and to a lesser extent Agency RMBS, Agency CMBS and ABS. The Company's investment strategy may change, subject to the Company's stated investment guidelines, and is based on its manager Western Asset Management Company, LLC's perspective of which mix of portfolio assets it believes provide the Company with the best risk-reward opportunities at any given time. The Company is externally managed and advised by Western Asset Management Company, LLC, an investment advisor registered with the Securities and Exchange Commission and a wholly-owned subsidiary of Franklin Resources, Inc.
Certain items in this press release may constitute forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to the proposed offering and the anticipated use of the net proceeds from the offering. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company can give no assurance that its expectations will be attained. Factors that may cause actual results to vary from our forward-looking statements include, but are not limited to, the economic and market impact of the COVID-19 pandemic, many of which are difficult to predict and are generally beyond the Company's control. In particular, it is difficult to fully assess the impact of COVID-19 at this time due to, among other factors, uncertainty regarding the severity and duration of the outbreak domestically and internationally and the effectiveness of federal, state and local governments' efforts to contain the spread of COVID-19 and respond to its direct and indirect impact on the U.S. economy and economic activity. Other factors are described in Risk Factors section of the Company's annual report on Form 10-K for the period ended December 31, 2020 filed with the SEC. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.
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