UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01. | Entry into a Material Definitive Agreement. |
On January 11, 2024, MFA Financial, Inc., a Maryland corporation (the “Company”), completed the issuance and sale of $115 million aggregate principal amount of its 8.875% Senior Notes due 2029 (the “Notes”), in a public offering pursuant to the Company’s registration statement on Form S-3ASR (File No. 333-267632) (the “Registration Statement”) and a related prospectus, as supplemented by a preliminary prospectus supplement, dated January 8, 2024 and a final prospectus supplement dated January 8, 2024, each filed with the Securities Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”).
The Notes were sold pursuant to an underwriting agreement (the “Underwriting Agreement”), dated as of January 8, 2024, by and between the Company and Wells Fargo Securities, LLC, Morgan Stanley & Co. LLC, Piper Sandler & Co. and UBS Securities LLC, as representatives of the several underwriters named therein (collectively, the “Underwriters”), whereby the Company agreed to sell to the Underwriters and the Underwriters agreed to purchase from the Company, subject to and upon the terms and conditions set forth in the Underwriting Agreement, the Notes. The Company made certain customary representations, warranties and covenants concerning the Company and the Registration Statement in the Underwriting Agreement and also agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act.
The Notes were issued at 100% of the principal amount, bear interest at a rate equal to 8.875% per year, payable in cash quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, beginning on May 15, 2024, and are expected to mature February 15, 2029 (the “Maturity Date”), unless earlier redeemed. The Company may redeem the Notes in whole or in part at any time or from time to time at the Company’s option on or after February 15, 2026, upon not less than 30 days written notice to holders prior to the redemption date, at a redemption price equal to 100% of the outstanding principal amount of the Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date, as described in greater detail in the Indenture (as defined below).
The Notes were issued under the indenture, dated June 3, 2019 (the “Base Indenture”), as supplemented by the second supplemental indenture, dated January 11, 2024 (the “Second Supplemental Indenture,” and together with the Base Indenture, the “Indenture”), by and between the Company and Wilmington Trust, National Association, as trustee. The Notes are senior unsecured obligations of the Company that rank senior in right of payment to any future indebtedness of the Company that is expressly subordinated in right of payment to the Note, including the Company’s 6.25% Convertible Senior Notes due 2024 (the “Convertible Notes”), effectively subordinated in right of payment to any of the Company’s existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) and (to the extent not held by the Company) preferred stock, if any, of the Company’s subsidiaries and of any entity the Company accounts for using the equity method of accounting.
The Indenture contains customary events of default. If there is an event of default under the Notes, the principal amount of the Notes, plus accrued and unpaid interest (including additional interest, if any), may be declared immediately due and payable, subject to certain conditions set forth in the Indenture. These amounts automatically become due and payable in the case of certain types of bankruptcy or insolvency events of default involving the Company.
The net proceeds to the Company from the sale of the Notes, after deducting the Underwriters’ discounts and commissions and estimated offering expenses, are expected to be approximately $96.8 million. The Company intends to use the net proceeds from this offering for general corporate purposes, which may include investing in additional residential mortgage-related assets, including but not limited to, residential whole loans, business purpose loans, MBS and other mortgage-related investments, and for working capital, which may include, among other things, the repayment of existing indebtedness, including amounts outstanding under the Company’s repurchase agreements and the repurchase or repayment of a portion of the Convertible Notes.
Copies of the Underwriting Agreement, the Base Indenture, the Second Supplemental Indenture and the form of the Notes are attached hereto as Exhibit 1.1, Exhibit 4.1, Exhibit 4.2 and Exhibit 4.3, respectively, and are incorporated herein by reference. The foregoing summaries do not purport to be complete and are qualified in their entirety by reference to the Underwriting Agreement, the Base Indenture, the Supplemental Indenture and the form of the Notes. In connection with the registration of the Notes under the Securities Act, the legal opinions of Venable LLP and Hunton Andrews Kurth LLP relating to the legality of the Notes are attached as Exhibit 5.1 and Exhibit 5.2, respectively, to this Current Report on Form 8-K.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 is incorporated herein by reference into this Item 2.03.
| Item 9.01 | Financial Statements and Exhibits. |
Exhibit
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MFA FINANCIAL, INC. | ||
| (REGISTRANT) | ||
| By: | /s/ Harold E. Schwartz | |
| Name: Harold E. Schwartz | ||
| Title: Senior Vice President and General Counsel | ||
Date: January 11, 2024