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TYLER CABOT MORTGAGE SECURITIES FUND ANNOUNCES PROPOSED MERGER WITH CAPSTEAD MORTGAGE CORPORATION /REPEATING FROM YESTERDAY/

 TYLER CABOT MORTGAGE SECURITIES FUND ANNOUNCES PROPOSED MERGER WITH
 CAPSTEAD MORTGAGE CORPORATION
 /REPEATING FROM YESTERDAY/
 DALLAS, June 17 /PRNewswire/ -- Tyler Cabot Mortgage Securities Fund, Inc. (NYSE: TMF) (Tyler Cabot) announced today that it has reached an agreement in principle to merge with Capstead Mortgage Corporation (NYSE: CMC) (Capstead).
 Under the terms of the proposed merger, which remains subject to negotiation and execution of a definitive agreement, 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. Both Tyler Cabot and Capstead are advised by subsidiaries of Lomas Mortgage USA.
 The agreement in principle to merge with Capstead was unanimously approved by Tyler Cabot's independent directors, who had reviewed the terms of the proposed merger with its financial advisor, Merrill Lynch & Co.
 In commenting on the proposed merger, Ronn K. Lytle, chairman of Tyler Cabot, said, "The proposed merger is advantageous to all stockholders. For Tyler Cabot's stockholders, the proposed merger provides that the monthly dividend will be maintained at its present level, despite the recent decline in interest rates. Moreover, Tyler Cabot's stockholders will also have the option to convert their shares of Series B Preferred Stock into Capstead's common stock."
 Consummation of the merger under the definitive agreement will be subject to approval by stockholders of both Tyler Cabot and Capstead at special meetings, and by various regulatory authorities. Final approval of the transaction will also be subject to the receipt by Tyler Cabot's board of an opinion from Merrill Lynch that the consideration to be received by Tyler Cabot's stockholders' under the proposed merger is fair from a financial point of view. In addition, in the event that the average closing price of Capstead common stock during a specified period prior to the consummation of the merger is less than $27.50 per share, Capstead has the option of terminating the definitive agreement upon payment to Tyler Cabot of $1 million, as well as Tyler Cabot's fees and expenses incurred in the transaction.
 Tyler Cabot also announced that although it is committed to a monthly dividend of 10-1/2 cents through the end of the fiscal year, if the proposed merger is not consummated, the decline in interest rates will require a reduction of the monthly dividend beginning in November 1992. Based on the yield of the investment portfolio and continuation of the current management strategy, net investment income and capital gains will initially support a monthly dividend in the range of 9 to 9-1/2 cents. At that dividend rate, Tyler Cabot's yield on net assets would be approximately 9-1/2 to 10 percent, which is greater than 2 percent above the current yield on 10-year United States Treasury Notes.
 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.
 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.
 -0- 6/17/92 R
 /CONTACT: Ronn K. Lytle or Andrew F. Jacobs, 214-746-7000, both for Tyler Cabot Mortgage Securities Fund/
 (TMF CMC) CO: Tyler Cabot Mortgage Securities Fund Inc.; Capstead Mortgage
 Corporation ST: Texas IN: FIN SU: TNM


PS -- NY029 -- 1456 06/18/92 11:13 EDT
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Publication:PR Newswire
Date:Jun 18, 1992
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