Franklin BSP Realty Trust, Inc. (f/k/a Benefit Street Partners
Realty Trust, Inc.) (“FBRT”), a publicly-registered, non-listed
real estate investment trust (“REIT”), and Capstead Mortgage
Corporation (NYSE: CMO) (“Capstead”), a REIT, today announced the
final exchange ratio and cash consideration for the previously
announced proposed merger between FBRT and Capstead.
Summary
- If the proposed merger is completed prior to market open on
October 19, 2021, as is currently anticipated, each outstanding
share of common stock of Capstead (“Capstead Common Stock”) will be
converted into the right to receive (i) from FBRT, 0.3288
newly-issued shares of common stock of FBRT (“FBRT Common Stock”),
(ii) from FBRT, cash consideration of $0.21 per share and (iii)
from FBRT’s external manager, Benefit Street Partners L.L.C.
(“BSP”), cash consideration of $0.73 per share. As an illustrative
example, a stockholder holding 10,000 shares of Capstead Common
Stock would receive 3,288 shares of FBRT Common Stock from FBRT,
$2,100.00 of cash consideration from FBRT and $7,300.00 of cash
consideration from BSP.
- No fractional shares of FBRT Common Stock will be issued in
connection with the merger. Instead, Capstead common stockholders
will receive cash in lieu of any fractional shares.
- Shares of Capstead Common Stock will continue to trade on the
New York Stock Exchange (“NYSE”) through the day on October 18,
2021. If the merger is completed as anticipated on October 19,
2021, trading in Capstead Common Stock will cease after market
close on October 18, 2021, and shares of Capstead Common Stock will
be converted into the right to receive FBRT Common Stock and the
cash consideration from FBRT and BSP prior to market open on
October 19, 2021.
- The newly issued shares of FBRT Common Stock will begin trading
on the NYSE under the ticker symbol “FBRT” on October 19,
2021.
- Registered holders of Capstead Common Stock will have their
FBRT shares posted to new accounts at SS&C Technologies Inc.,
the transfer agent for FBRT. Beneficial holders of Capstead Common
Stock will have their FBRT shares posted to their individual
accounts at their broker or financial institution, in accordance
with the policies and procedures of such broker or financial
institution.
- The proposed merger remains subject to approval by Capstead’s
stockholders and satisfaction of other customary closing
conditions. The special meeting of common stockholders for Capstead
will take place virtually on Friday, October 15, 2021, at 9:00 a.m.
Central Time, at www.proxydocs.com/CMO.
Preferred Stock
- Upon the completion of the merger, each share of Capstead 7.50%
Series E Cumulative Redeemable Preferred Stock will be converted
into the right to receive one share of newly classified FBRT 7.50%
Series E Cumulative Redeemable Preferred Stock.
- If the merger is completed as anticipated on October 19, 2021,
such newly issued shares of FBRT preferred stock will begin trading
on the NYSE under the ticker symbol “FBRT PRE” on October 19,
2021.
Exchange Ratio Determination
The exchange ratio was determined in accordance with the terms
of the previously announced Agreement and Plan of Merger, dated as
of July 25, 2021, as amended pursuant to that certain First
Amendment to Agreement and Plan of Merger, dated as of September
22, 2021 (as amended, the “Merger Agreement”), by and among FBRT,
Rodeo Sub I, LLC (“Merger Sub”), Capstead and, solely for the
purposes set forth therein, BSP, pursuant to which, subject to the
terms and conditions therein, Capstead will be merged with and into
Merger Sub, with Merger Sub continuing as the surviving company
(such transaction, the “Merger”). Following the Merger, the
surviving company will be a direct, wholly owned subsidiary of
FBRT.
If the Merger and the other transactions contemplated by the
Merger Agreement are completed, Capstead common stockholders will
receive 0.3288 newly issued shares of FBRT Common Stock for each
share of Capstead Common Stock held immediately prior to the
effective time of the Merger, as well as cash consideration of
$0.21 per share from FBRT and cash consideration of $0.73 per share
from BSP as specified in the Merger Agreement. Each holder of
Capstead Common Stock who would otherwise have been entitled to
receive a fraction of a share of FBRT Common Stock will be entitled
to receive, in lieu thereof, cash, without interest, in an amount
equal to (x) such fractional part of a share of FBRT Common Stock,
multiplied by (y) the average of the volume weighted average price
of one share of Capstead Common Stock for the five consecutive
trading days immediately prior to the date of closing of the
Merger, as reported by Bloomberg L.P., multiplied by (z) the
exchange ratio.
The number of shares of FBRT Common Stock to be issued in the
Merger is based on an exchange ratio determined by dividing (x)
Capstead’s adjusted book value per share by (y) FBRT’s adjusted
book value per share, each as calculated at a time and pursuant to
certain calculation principles set forth in the Merger Agreement.
As defined in the Merger Agreement, adjusted book value per share
for each company means (i) such company’s total consolidated common
stockholders’ equity after giving pro forma effect to any dividends
or other distributions for which the record date is after the
exchange ratio determination date (which was September 30, 2021)
but prior to the closing of the Merger and as modified for
potential transaction-related adjustments, divided by (ii) each
respective company’s number of shares of common stock issued and
outstanding, including, in the case of Capstead, shares issuable
upon the vesting of any outstanding company performance units and,
in the case of FBRT, shares issuable upon the conversion of FBRT’s
preferred stock in connection with the initial listing of FBRT
Common Stock on the NYSE.
(in thousands except share and
per share amounts)
FBRT
Capstead
Total consolidated stockholders’
equity
$1,071,365
$842,255
Adjustments(1)
$(24,486)
$(259,583)
Adjusted book value
$1,046,879
$582,672
Shares of common stock
57,616,523
97,541,361
Adjusted book value per
share(2)
$18.170
$5.974
(1)
Reflects, (a) for FBRT, deduction of (i)
$4,002 for additional dividends or other distributions on shares of
FBRT Common Stock that are declared or are anticipated to be
declared for which the record date is or will be prior to the
effective time of the Merger and (ii) $20,484 for the per share
cash consideration of $0.36 and (b) for Capstead, a deduction of
(i) $258,226 for the total Capstead preferred stock liquidation
preference, (ii) $1,356 for additional dividends or other
distributions on shares of Capstead Common Stock that are declared
or are anticipated to be declared for which the record date is or
will be prior to the effective time of the Merger and (iii) the
dilutive effect of the vesting of company performance units.
(2)
FBRT book value per share as of September
30, 2021, was $18.60 prior to merger-related adjustments of $0.430.
Capstead book value per share as of September 30, 2021, was $6.03
prior to merger-related adjustments of $0.055.
Exchange
Ratio
$5.974 / $18.170 = 0.3288
The final exchange ratio is based on the actual book values of
FBRT and Capstead as of the determination date of September 30,
2021, pursuant to the Merger Agreement. The previously announced
illustrative exchange ratio of 0.3521 was based on the adjusted
book value per share of FBRT and Capstead as of June 30, 2021, and
was set out for illustrative purposes only in the proxy
statement/prospectus, dated September 7, 2021, that was filed by
FBRT with the Securities and Exchange Commission (“SEC”) and
previously distributed to Capstead’s common stockholders. The total
consideration to Capstead common stockholders represents a 15.75%
premium to the Capstead adjusted book value per share.
Based on the number of shares of Capstead Common Stock
outstanding on August 26, 2021, the record date for the special
meeting of common stockholders of Capstead, and the 0.3288 exchange
ratio described above, approximately 32,071,599 shares of FBRT
Common Stock will be issued in connection with the Merger. Further,
based on these assumptions, after giving effect to the Merger,
continuing FBRT stockholders will own approximately 64% of the
common equity of the combined company, and former Capstead common
stockholders will own approximately 36% of the common equity of the
combined company (after applying (i) the conversion of all of the
outstanding shares of FBRT’s Series A convertible preferred stock
into common stock as of the closing of the Merger and (ii) assuming
conversion of all of the outstanding shares of FBRT’s Series C,
Series D and Series F convertible preferred stock (as if such
shares had converted on the closing)).
In addition, as part of the Merger, each share of 7.50% Series E
Cumulative Redeemable Preferred Stock, par value $0.10 per share,
of Capstead will be converted into the right to receive one share
of newly classified 7.50% Series E Cumulative Redeemable Preferred
Stock, par value $0.01 per share, of FBRT.
A special meeting of common stockholders of Capstead will take
place virtually on Friday, October 15, 2021, at 9:00 a.m. Central
Time, at www.proxydocs.com/CMO, at which the Capstead common
stockholders will be asked to approve the Merger and the other
transactions contemplated by the Merger Agreement.
The Merger Agreement has been approved by both companies’ boards
of directors. The completion of the Merger is subject to the
satisfaction of certain customary conditions, including approval of
the common stockholders of Capstead. The companies currently expect
the transaction to close on October 19, 2021.
About Capstead
Formed in 1985 and based in Dallas, Texas, Capstead is a
self-managed real estate investment trust, or REIT, for federal
income tax purposes. Capstead earns income from investing in a
leveraged portfolio of primarily residential adjustable-rate
mortgage pass-through securities, referred to as ARM securities,
issued and guaranteed by government-sponsored enterprises, either
Fannie Mae or Freddie Mac, or by an agency of the federal
government, Ginnie Mae.
About Franklin BSP Realty Trust,
Inc.
Franklin BSP Realty Trust, Inc. (f/k/a Benefit Street Partners
Realty Trust, Inc.) (“FBRT”) is a publicly-registered, private real
estate investment trust that originates, acquires and manages a
diversified portfolio of commercial real estate debt secured by
properties located in the United States. As of September 30, 2021,
FBRT had over $3 billion of assets. FBRT is externally managed by
Benefit Street Partners L.L.C. For further information, please
visit www.bsprealtytrust.com.
About Benefit Street Partners
Benefit Street Partners L.L.C. (“BSP”) is a leading
credit-focused alternative asset management firm with over $33
billion in assets under management as of August 31, 2021. BSP
manages assets across a broad range of complementary credit
strategies, including private/opportunistic debt, structured
credit, high yield, special situations, and commercial real estate.
Based in New York, the BSP platform was established in 2008. BSP is
a wholly owned subsidiary of Franklin Templeton. For further
information, please visit www.benefitstreetpartners.com.
About Franklin Templeton
Franklin Resources, Inc. (NYSE:BEN) is a global investment
management organization with subsidiaries operating as Franklin
Templeton and serving clients in over 165 countries. Franklin
Templeton’s mission is to help clients achieve better outcomes
through investment management expertise, wealth management and
technology solutions. Through its specialist investment managers,
the company brings extensive capabilities in equity, fixed income,
multi-asset solutions and alternatives. With offices in more than
30 countries and approximately 1,300 investment professionals, the
California-based company has over 70 years of investment experience
and over $1.5 trillion in assets under management as of September
30, 2021. For more information, please visit
franklinresources.com.
Important Additional Information About the
Merger and Where to Find It
In connection with the proposed Merger, FBRT has filed with the
SEC a registration statement on Form S-4 (File No. 333-258947),
which was declared effective by the SEC on September 3, 2021. The
registration statement includes a prospectus of FBRT and a proxy
statement of Capstead. On September 23, 2021, Capstead and FBRT
respectively filed with the SEC a supplement to the proxy
statement/prospectus with respect to the First Amendment to
Agreement and Plan of Merger. On October 6, 2021, Capstead filed
with the SEC a supplement to the proxy statement/prospectus with
respect to disclosure claims by purported stockholders of Capstead.
Capstead and FBRT also expect to file with the SEC other documents
regarding the Merger.
STOCKHOLDERS OF CAPSTEAD AND FBRT ARE ADVISED TO READ THE
REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS
(INCLUDING ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE
FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS AND SUPPLEMENTS TO
THESE DOCUMENTS) CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY
CONTAIN IMPORTANT INFORMATION ABOUT CAPSTEAD, FBRT, THE PROPOSED
MERGER AND RELATED MATTERS. Stockholders of Capstead and FBRT may
obtain free copies of the registration statement, the proxy
statement/prospectus and all other documents filed or that will be
filed with the SEC by Capstead or FBRT at the SEC’s website at
http://www.sec.gov. Copies of documents filed with the SEC by
Capstead are available free of charge on Capstead’s website at
http://www.capstead.com/investor-relations/financial-reports/sec-filings.
Copies of documents filed with the SEC by FBRT are available free
of charge on FBRT’s website at
https://benefitstreetpartners.com/our-business/funds/BSPRT/BSPRT-investor-relations/.
Participants in the Solicitation Relating to
the Merger
Capstead, FBRT and their respective directors, executive
officers and other members of management and employees may be
deemed to be “participants” in the solicitation of proxies from the
stockholders of Capstead in connection with the proposed Merger.
Information regarding Capstead and its directors and executive
officers and their ownership of common stock of Capstead can be
found in Capstead’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2020, and in its definitive proxy statement
relating to its 2021 annual meeting of stockholders filed with the
SEC on April 1, 2021. Information regarding FBRT and its directors
and executive officers and their ownership of common stock of FBRT
can be found in FBRT’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2020, and in its definitive proxy statement
relating to its 2021 annual meeting of stockholders filed with the
SEC on April 8, 2021. Additional information regarding the
interests of such individuals in the Merger is included in the
proxy statement/prospectus relating to the Merger filed with the
SEC on September 7, 2021, as supplemented on September 23, 2021,
and October 6, 2021. Free copies of these documents may be obtained
as described in the preceding paragraph.
No Offer or Solicitation
This communication and the information contained herein does not
constitute an offer to sell or the solicitation of an offer to buy
or sell any securities or a solicitation of a proxy or of any vote
or approval, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended. This communication may be deemed to be solicitation
material in respect of the proposed Merger.
Cautionary Statement Concerning
Forward-Looking Statements
This communication contains statements that constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Statements can
generally be identified as forward-looking because they include
words such as “believes,” “anticipates,” “expects,” “would,”
“could,” or words of similar meaning. Such forward-looking
statements include or may relate to statements about the benefits
of the proposed Merger and statements that address operating
performance, events or developments that Capstead expects or
anticipates will occur in the future, including but not limited to
statements regarding future financial and operating results, plans,
objectives, expectations and intentions, expected sources of
financing, anticipated asset dispositions, anticipated leadership
and governance changes, changes to outstanding structure of
Capstead’s capital stock, creation of value for stockholders,
operation and implementation of share repurchase programs, benefits
of the proposed Merger to customers, stockholders and other
constituents of the combined company, the integration of Capstead
and FBRT, the expected GAAP book value per share of Capstead, cost
savings and the expected timetable for completing the proposed
Merger, and other non-historical statements. These statements are
based on the companies’ 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, including those related to the payment
of future dividends; Capstead can give no assurance that its
expectations will be attained. Factors that could cause actual
results to differ materially from Capstead’s expectations include,
but are not limited to, the risk that the Merger will not be
consummated within the expected time period or at all; the
occurrence of any event, change or other circumstance that could
give rise to the termination of the Merger Agreement; the failure
to satisfy the conditions to the consummation of the proposed
Merger, including the approval of the stockholders of Capstead;
fluctuations in the adjusted book value per share of both Capstead
and FBRT; risks related to the disruption of management’s attention
from ongoing business operations due to the proposed Merger; the
availability of suitable investment or disposition opportunities;
changes in interest rates; the availability and terms of financing;
the impact of the COVID-19 pandemic on the operations and financial
condition of each of Capstead and FBRT and the industries in which
they operate; general financial and economic conditions, which may
be affected by government responses to the COVID-19 pandemic;
market conditions; legislative and regulatory changes that could
adversely affect the business of Capstead and FBRT; and other
factors, including those set forth in the section entitled “Risk
Factors” in the proxy statement/prospectus, Capstead’s and FBRT’s
most recent Annual Reports on Form 10-K, as amended, and Quarterly
Reports on Form 10-Q filed with the SEC, and other reports filed by
Capstead and FBRT with the SEC, copies of which are available on
the SEC’s website, www.sec.gov. Forward-looking statements are not
guarantees of performance or results and speak only as of the date
such statements are made. Except as required by law, neither
Capstead nor FBRT undertakes any obligation to update or revise any
forward-looking statement in this communication, whether to reflect
new information, future events, changes in assumptions or
circumstances or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211012006226/en/
Investor: Capstead Mortgage Corporation Lindsey Crabbe, Investor
Relations (214) 874-2339 lcrabbe@capstead.com
Franklin BSP Realty Trust, Inc. Amy Theaumont Vice President,
Investor Relations (617) 433-2543 a.theaumont@benefitstreetpartners.com
Media for Capstead: Sard Verbinnen & Co Stephen Pettibone
Cameron Seligmann (212) 687-8080 Capstead-SVC@sardverb.com
Media for Franklin BSP Realty Trust, Inc.: Prosek Partners: Kate
Dillon (518) 859-2892 kate.dillion@prosek.com
Franklin Templeton Corporate Communications Rebecca Radosevich
(212) 632-3207 rebecca.radosevich@franklintempleton.com
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