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CAPSTEAD MORTGAGE CORPORATION ANNOUNCES PROPOSED MERGER WITH TYLER CABOT MORTGAGE SECURITIES FUND, INC. /repeating from yesterday/

CAPSTEAD MORTGAGE CORPORATION ANNOUNCES PROPOSED MERGER WITH TYLER CABOT
 MORTGAGE SECURITIES FUND, INC.
 /repeating from yesterday/
 DALLAS, June 17 /PRNewswire/ -- Capstead Mortgage Corporation (NYSE: CMO) ("Capstead") announced today that it has reached an agreement in principle to acquire Tyler Cabot Mortgage Securities Fund, Inc. (NYSE: TMF) ("Tyler Cabot"). Under the terms of the proposed transaction, which remains subject to negotiation and execution of a definitive agreement, Tyler Cabot would be merged with and into Capstead and each share of Tyler Cabot common stock would be converted into one newly issued share of Capstead $1.26 Cumulative Convertible Preferred Stock, Series B ("Series B Preferred Stock"). The Series B Preferred Stock will be entitled to a fixed preferred dividend of $1.26 per annum, payable in equal monthly installments, and will be convertible into shares of Capstead common stock at any time based on a conversion ratio which will be fixed using the price of the Capstead common stock during a specified period prior to the closing of the merger. Based on the closing price of Capstead on June 16, the conversion ratio would have been approximately .35 shares of Capstead common stock for each share of Series B Preferred Stock. Capstead intends to apply to the New York Stock Exchange to list the Series B Preferred Stock.
 The agreement in principle to acquire Tyler Cabot was unanimously approved by Capstead's independent directors, who had reviewed the terms of the proposed merger with its financial advisor, PaineWebber Incorporated. PaineWebber has preliminarily advised the Board of Directors that it is prepared to render an opinion stating that the consideration to be paid by Capstead to the stockholders of Tyler Cabot under the proposed merger transaction is fair to the stockholders of Capstead from a financial point of view.
 Consummation of the transaction under a definitive agreement will be subject to approval by stockholders of both Capstead and Tyler Cabot at special meetings and by various regulatory authorities.
 Separately, Capstead announced that it has approved an agreement in principle pursuant to which its management agreement with Capstead Advisers, Inc. (the "Manager"), a wholly-owned subsidiary of Lomas Mortgage USA, Inc. ("Lomas"), would be revised and extended to December 31, 1996. Under the terms of the revised agreement, management fees would be reduced to an amount equal to the Manager's costs plus a fixed profit aggregating $16.5 million during the term of the extended agreement.
 Capstead also announced that it has reached an agreement in principle pursuant to which Capstead will acquire from the Manager certain computer software currently used in the operations of Capstead; receive an option to acquire at a price equal to three times related annual revenues Lomas' master servicing contract relating to all Capstead loans; and obtain a limited 65-month non-compete agreement from Lomas and its parent. In consideration, Capstead would pay Lomas $5 million in cash on August 1, 1992, $1 million in cash on January 2, 1997, and grant to Lomas a six-year option to acquire 750,000 shares of Capstead common stock at a price per share equal to the closing price of Capstead's common stock on the New York Stock Exchange on June 16, 1992.
 In commenting on the merger, Ronn K. Lytle, president of Capstead,
 remarked, "We believe this transaction will prove to be highly
 beneficial to stockholders of both companies. The acquisition will double Capstead's stockholders' equity to approximately $635 million and will increase book value per share from $20.00 to approximately $24.50, assuming conversion of all outstanding preferred stock. The assets of Tyler Cabot are substantially all mortgage-backed securities which can
 be used as collateral for the issuance of collateralized mortgage obligations. The proceeds from such issuance will then be available to
 Capstead."
 Lytle went on to say, "The revised management agreement will benefit Capstead by substantially reducing management fees. Further, in a step towards eventual self-administration, Capstead has agreed to buy certain
 assets of the Manager and is preparing to eventually expand its


activities to include the servicing and master servicing of its own mortgage loans in order to provide broader services to its customers and
 mortgagors."
 Lytle concluded, "We are excited about the proposed merger of Capstead and Tyler Cabot. Capstead will become one of the most highly capitalized mortgage investment firms in the United States. As a result of the proposed merger and the other changes announced today, Capstead will be better positioned to take advantage of the growing opportunities for investment and securitization of single-family jumbo mortgage loans during the 1990s."
 In addition, Capstead also announced that effective August 1, 1992, Lytle, currently president and chief operating officer of Capstead, will become Capstead's first full-time chairman of the board and chief executive officer. Lytle succeeds Jess Hay who has served as Capstead's part-time chairman and chief executive officer since Capstead's inception in 1985. Hay will continue to serve as a director of Capstead and as chairman and chief executive officer of Lomas and the Manager.
 Tyler Cabot is a diversified closed-end management investment company organized to provide stockholders with high current income, consistent with the preservation of capital. Tyler Cabot invests primarily in mortgage-backed securities and, to a lesser extent, in other mortgage securities. At least 80 percent of Tyler Cabot's investments must be issued or guaranteed by the United States Government, or rated AAA when purchased.
 Capstead invests in long-term, single-family residential mortgages for the purpose of offering investors the opportunity to participate in the income generated from the management of a portfolio of mortgage loans utilizing pooling and the issuance of collateralized mortgage obligations and other portfolio management strategies.
 Both Tyler Cabot and Capstead are advised by subsidiaries of Lomas.
 -0- 6/17/92 R
 /CONTACT: Ronn K. Lytle, 214-746-8231, or Andrew F. Jacobs, 214-746-8240, both of Capstead Mortgage Corporation.
 (CMO TMF) CO: Capstead Mortgage Corporation; Tyler Cabot Mortgage Securities
 Fund Inc. ST: Texas IN: FIN SU: TNM


MK -- NY027 -- 1449 06/18/92 11:06 EDT
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Date:Jun 18, 1992
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