Harbors Investment Corp. (NYSE: TWO; NYSE MKT: TWO.WS)
today announced that its board of directors has declared a quarterly
dividend of $0.32 per share of common stock for the first quarter of
2013 as well as a special dividend to distribute the company's shares of
Silver Bay Realty Trust Corp. ("Silver Bay") common stock. The company
also announced certain adjustments to the terms of its outstanding
warrants as a result of the special dividend of Silver Bay common stock.
First Quarter 2013 Dividend
The company's board of directors declared a quarterly dividend of $0.32
per share of common stock for the first quarter of 2013 (the "Quarterly
Dividend"). The Quarterly Dividend is payable on April 24, 2013 to
common stockholders of record at the close of business on April 2, 2013.
Two Harbors distributes dividends based on a number of considerations,
including its current estimate of taxable earnings per common share, not
GAAP earnings. Taxable and GAAP earnings are expected to differ
principally because of differences in discount accretion and premium
amortization, certain non-taxable unrealized and realized gains and
losses on derivatives, and non-deductible general and administrative
Special Dividend of Silver Bay Common Stock
Two Harbors previously announced it received 17,824,647 shares of Silver
Bay common stock, par value $0.01 per share (the "Silver Bay Common
Stock"), in exchange for contributing its portfolio of over 2,200 single
family homes to Silver Bay concurrent with the closing of Silver Bay's
initial public offering in December of 2012. Silver Bay's common stock
is listed on the New York Stock Exchange under the symbol "SBY."
The special committee of the company's board of directors has declared a
special dividend (the "Stock Dividend") pursuant to which the Silver Bay
Common Stock will be distributed, on a pro rata basis, to Two Harbors
stockholders of record at the close of business on April 2, 2013 (the
"Record Date"). As of March 17, 2013, there were 300,722,420 shares of
company common stock issued and outstanding.
"We are pleased to announce the distribution of the Silver Bay Common
Stock. This special dividend fulfills our stated intention for this
investment," stated Thomas Siering, Two Harbors' President and Chief
Executive Officer. "Optimization of shareholder value is always our
primary organizational objective. We believe Two Harbors' stockholders
are best served by this distribution and this allows them the
opportunity to determine their desired level of exposure to this
emerging asset class."
American Stock Transfer & Trust Company, LLC, will serve as the
distribution agent for the Stock Dividend. Following the Record Date,
the company will work with the distribution agent and the company's
transfer agent to calculate the distribution ratio for the Stock
Dividend, and issue a subsequent press release to report the final
distribution ratio. The distribution of the Stock Dividend is
expected to occur on or about April 24, 2013.
Fractional shares of Silver Bay Common Stock will not be distributed as
part of the Stock Dividend. Instead, as soon as practicable after the
distribution date for the Stock Dividend, the distribution agent will
aggregate all fractional shares of Silver Bay Common Stock into whole
shares and sell those shares in the open market at prevailing market
prices and distribute the aggregate net cash proceeds of those sales pro
rata to each holder who otherwise would have been entitled to receive a
fractional share as a result of the Stock Dividend.
The company intends to distribute cash in 2013 that is equal to its
current and accumulated earnings and profit through December 31, 2013
(which includes the company's annual 2013 taxable income), in addition
to distributing the Silver Bay Common Stock. We expect that the
cumulative quarterly 2013 distributions of cash and Silver Bay Common
Stock that are in excess of the current and accumulated earnings and
profit will be treated as a "nondividend distribution" for U.S. federal
income tax purposes, which will have the effect of reducing the basis of
a shareholder's shares of Two Harbors common stock. If a stockholder has
fully recovered his, her or its basis in their Two Harbors common stock,
a nondividend distribution may be treated as a capital gain.
We expect that each quarterly distribution during 2013 will be
characterized for tax purposes as having the same percentage allocation
that is designated as ordinary, capital gain, and nondividend
distribution. The percentage allocation is based on the total cash and
the fair market value of property distributed relative to the annual
2013 taxable income. Therefore, the nondividend distribution component
will be allocated on a Form 1099 for federal income tax purposes to each
dividend paid during 2013.
The U.S. federal income tax treatment of holding our common stock to any
particular stockholder will depend on the stockholder's particular tax
circumstances. You are urged to consult your tax advisor regarding the
U.S. federal, state, local and foreign income and other tax consequences
to you, in light of your particular investment or tax circumstances, of
acquiring, holding and disposing of Two Harbors common stock.
Certain Adjustment to Outstanding Warrants
Under the terms of the warrant agreement governing the company's
warrants, the Stock Dividend requires an adjustment to (1) the exercise
price payable upon exercise of the warrants (currently $11.00 per
warrant share), and (2) the number of shares of company common stock
issuable upon exercise of the warrants and payment of the exercise price
therefore (currently, one share of common stock per warrant share
exercised) (together, the "Warrant Adjustments"). Calculation of the
Warrant Adjustments is determined based on, among other things, the
closing price of the company's common stock on the business day
immediately preceding the ex-dividend date for the Stock Dividend and
the fair market value of the Stock Dividend to be received for each
share of the company's common stock on the ex-dividend date. Accordingly,
the Warrant Adjustments will be calculated following the ex-dividend
date and the company will issue a subsequent press release to report the
final Warrant Adjustments.
Warrant holders who wish to participate in the Stock Dividend must
exercise their warrants, pay the exercise price therefore, and become a
stockholder of record of Two Harbors on or before the Record Date for
the Stock Dividend. It is important to note that the Warrant Adjustments
apply only to those warrants that are not exercised and remain
outstanding following the Record Date.
As of March 17, 2013, approximately 11.5 million warrants remained
outstanding. The warrants expire on November 7, 2013.
Two Harbors Investment Corp.
Two Harbors Investment Corp., a Maryland corporation, is a real estate
investment trust that invests in residential mortgage-backed securities,
residential mortgage loans and other financial assets. Two Harbors is
headquartered in Minnetonka, Minnesota, and is externally managed and
advised by PRCM Advisers LLC, a wholly-owned subsidiary of Pine River
Capital Management L.P. Additional information is available at www.twoharborsinvestment.com.
This press release includes "forward-looking statements" within the
meaning of the safe harbor provisions of the United States Private
Securities Litigation Reform Act of 1995. Actual results may differ from
expectations, estimates and projections and, consequently, readers
should not rely on these forward-looking statements as predictions of
future events. Words such as "expect," "target," "assume," "estimate,"
"project," "budget," "forecast," "anticipate," "intend," "plan," "may,"
"will," "could," "should," "believe," "predicts," "potential,"
"continue," and similar expressions are intended to identify such
forward-looking statements. These forward looking statements made in
this release include, but may not be limited to, expectations around the
company's plans to distribute current and accumulated earnings in 2013,
tax treatment and characterization of distributions made by the company
in 2013, adjustments to terms of outstanding warrants to purchase the
company's common stock and timing and content of any announcements made
with respect thereto.
Readers are cautioned not to place undue reliance upon any
forward-looking statements, which speak only as of the date made. The
company does not undertake or accept any obligation to release publicly
any updates or revisions to any forward-looking statement to reflect any
change in its expectations or any change in events, conditions or
circumstances on which any such statement is based. Additional
information concerning these and other risk factors is contained in the
company's most recent filings with the Securities and Exchange
Commission. All subsequent written and oral forward looking statements
concerning the company or matters attributable to the company or any
person acting on its behalf are expressly qualified in their entirety by
the cautionary statements above.
Stockholders and warrant holders of Two Harbors, and other interested
persons, may find additional information regarding the company at the
Securities and Exchange Commission's Internet site at www.sec.gov
or by directing requests to: Two Harbors Investment Corp., 601 Carlson
Parkway, Suite 1400, Minnetonka, MN 55305, telephone 612-629-2500.
Two Harbors Investment Corp.
July Hugen, Investor