KANSAS CITY, Mo., May 4, 2011 /PRNewswire/ -- NovaStar Financial,
Inc. (OTCQB: Common Stock: NOVS; Series C Preferred Stock: NOVSP)
(the "Company") commenced an exchange offer today for the issued
and outstanding shares of publicly-held 8.90% Series C Cumulative
Redeemable Preferred Stock of the Company, par value $0.01 per share (the "Series C Preferred Stock"),
including accrued and unpaid dividends thereon, subject to certain
conditions and any necessary proration. In exchange for the
Series C Preferred Stock, the Company will offer, in aggregate,
approximately 43,823,600 newly-issued shares of common stock of the
Company, par value $0.01 per share
("Common Stock"), and $1,623,000 in
cash (the "Series C Offer").
The holders of Series C Preferred Stock ("Series C Holders")
electing to tender in the Series C Offer may elect to exchange
their shares of Series C Preferred Stock for either (i) 3 shares of
newly-issued Common Stock and $2.00
in cash (the "Cash-and-Stock Option") or (ii) 19 shares of
newly-issued Common Stock (the "Stock-Only Option"). The actual mix
of cash and Common Stock a Series C Holder will receive upon tender
may be adjusted according to the total number of Series C Holders
who elect the Cash-and-Stock Option and the total number of Series
C Holders who elect the Stock-Only Option. The completion of
the Series C Offer requires the tender and consent of holders of at
least two-thirds of the outstanding shares of Series C Preferred
Stock, and the requisite shareholder approval of certain amendments
to the Company's charter.
Concurrently with the closing of the Series C Offer, the Company
will complete an exchange for the privately-held 9.00% Series D1
Mandatory Convertible Preferred Stock, par value $0.01 per share (the "Series D Preferred Stock")
for an aggregate of 37,161,600 shares of newly-issued Common Stock
and $1,377,000 in cash (the "Series D
Exchange"). Together, the Series C Offer and the Series D Exchange
constitute the Company's plan of recapitalization of its
outstanding preferred stock (the "Recapitalization").
The Company is undertaking the Recapitalization in order to
improve its capital structure and to eliminate its obligation with
respect to outstanding and future preferred dividends and the
preferred liquidating preference. As of April 15, 2011, there were accrued and unpaid
dividends of approximately $23.6
million and $32.3 million on
the Series C Preferred Stock and the Series D Preferred Stock,
respectively. As of April 15,
2011, the aggregate liquidating preference of the Series C
Preferred Stock and Series D Preferred Stock was $74.8 million and $52.5
million, respectively.
The Series C Offer will expire at 5:00
p.m., Eastern Time, on June 23,
2011, unless the Company extends the period of time for
which the Series C Offer is open. Tendered shares of Series C
Preferred Stock may be withdrawn at any time prior to the
expiration date.
Where You Can Find Additional Information
Completion of the Recapitalization is subject to certain
conditions, which are set forth in more detail in the Company's
registration statement on Form S-4 (the "Registration Statement")
filed with the Securities and Exchange Commission ("SEC") for the
purpose of registering the Common Stock issued pursuant to the
Series C Offer under the Securities Act of 1933, as amended. The
Registration Statement was declared effective on May 2, 2011. The Company has also filed
with the SEC a joint Schedule TO/13E-3 for the Series C Offer and a
proxy statement on Schedule 14A to solicit proxies from the holders
of its Common Stock to approve the relevant items upon which the
holders of the Common Stock will be entitled to vote (the "Proxy
Statement"). The Company may extend the Series C Offer under
certain circumstances as described in the Registration
Statement.
If you have questions about the Series C Offer, you should
contact:
Georgeson Inc.
199 Water Street, 26th Floor
New York, NY 10038-3560
Banks and Brokers Call (212) 440-9800
All Others Call Toll-Free (866) 695-6074
This does not constitute an offer of any securities for sale.
Further, this communication is not a solicitation of a proxy from
any security holder of the Company and shall not constitute the
solicitation of an offer to buy securities.
Series C Holders should read the Registration Statement and
the Schedule TO/13-E3 for the Series C Offer as they contain
important information about the Series C Offer, the Company and the
other proposed transactions. Holders of Common Stock should read
the Proxy Statement and any other relevant documents because they
contain important information about the Company and the proposed
transactions. The Registration Statement, Schedule TO/13E-3 and
Proxy Statement are available for free on the SEC's website,
www.sec.gov. The prospectus included in the
Registration Statement and additional copies of the Proxy Statement
will be available for free from the Company for the applicable
shareholders of the Company.
About NovaStar
NovaStar Financial, Inc., headquartered in Kansas City, Missouri, is currently engaged in
managing its portfolio of nonconforming residential mortgage
securities and owning and operating three majority-owned
subsidiaries: StreetLinks National Appraisal Services LLC, a
national residential appraisal and real estate valuation management
services company; Advent Financial Services LLC, a start-up
business which provides access to tailored banking accounts, small
dollar banking products and related services to low and moderate
income level individuals; and Corvisa LLC, a technology company
that develops and markets its software products to mortgage
lenders. Prior to 2008, NovaStar originated, securitized,
sold and serviced residential nonconforming mortgage loans.
For information regarding the Company, contact Matt Kaltenrieder, Investor Relations, at (816)
237-7508.
Forward-Looking Statements
Statements in this press release regarding the Company and its
business, which are not historical facts, are "forward-looking
statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements are
those that predict or describe future events and that do not relate
solely to historical matters and include statements regarding
management's beliefs, estimates, projections, and assumptions with
respect to, among other things, our future operations, business
plans and strategies, as well as industry and market conditions,
all of which are subject to change at any time without notice.
Words such as "believe," "expect," "anticipate," "promise," "plan,"
and other expressions or words of similar meanings, as well as
future or conditional verbs such as "would," "should," "could," or
"may" are generally intended to identify forward-looking
statements. No assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, regarding the impact they will have
on the results of operations or financial condition of the Company.
This press release speaks only as of its date and the Company
expressly disclaims any duty to update the information herein
except as required by federal securities laws.
SOURCE NovaStar Financial, Inc.