NEWPORT BEACH, Calif.,
June 30, 2015 /PRNewswire/ -- CV
Holdings, Inc. (Other OTC: CVHL) today reported that it has entered
into a Securities Purchase Agreement and an Investor Rights
Agreement with an affiliate of Tricadia Capital Management, LLC
("Tricadia" or the "Investor") in connection with the sale in a
private placement of shares of newly created Non-Convertible Senior
Preferred Stock of the Company ("Preferred") and shares of Common
Stock of the Company ("Common") to grow the Company's
non-performing loan ("NPL") business and develop other business
lines as agreed with Tricadia. The Tricadia investment
is expected to replace the existing funding source for the
Company's co-investment requirements on its NPL business. The
Company is currently evaluating several other investment
opportunities and, subject to Tricadia's approval, may decide to
pursue one or more of them.
The Investor may purchase up to $50.0
million of Preferred through multiple issuances, subject to
certain agreed-upon conditions. On June 29, 2015, the Investor purchased
$20.0 million of Preferred and
received 4,350,000 shares of Common plus the right to receive an
additional 8,271,596 shares at its option, together comprising 20%
of the fully diluted common equity of the Company as of such date.
The Investor may require that the Company redeem any Preferred on
and after the five-year anniversary of its respective
issuance. The Company has the option to pay or accrue a 10%
dividend on Preferred from closing through the three-year
anniversary of each issuance, and then may either continue to pay
Preferred dividends in cash at the rate of 10% per annum or accrue
such dividends at the rate of 12% per annum until the Preferred is
redeemed or otherwise defeased. The Company may redeem any
Preferred, subject to certain approvals by the Investor, on and
after the three-year anniversary of its issuance. If the
Company fails to make payment of dividends or redeem the Preferred
timely, the Investor may become entitled to appoint a majority of
the members of the Company's board of directors.
At each subsequent funding by the Investor, the Company will
issue additional shares of Common comprising 1% of the fully
diluted common equity of the Company (calculated as of the date of
such funding, as adjusted for any previous issuances that have
diluted the Investor's ownership) for every $1.0 million of Preferred purchased. If the
full $50.0 million of Preferred were
to be issued to the Investor, the Investor would consequently also
own 50% of the Company on a fully diluted basis. In addition,
the Investor has pre-emptive and other rights allowing the Investor
to purchase any new issuances of securities by the Company.
The Investor has material corporate governance rights,
including, among other things, the equivalent of two board seats
and approval rights over major corporate decisions. No
assurances can be given that the Investor will purchase additional
Preferred or as to the timing or nature of the investment of the
proceeds to the Company from any such issuance.
Although Preferred has a liquidation preference that is senior
to Common, Preferred is not convertible into Common and therefore
does not dilute the existing voting power or ownership of the
holders of Common. Notwithstanding the foregoing, the Common
issued and to be issued in conjunction with Preferred increases the
amount of issued and outstanding Common, as described below.
At closing, the Company's outstanding fully diluted common shares
increased from the currently fully diluted 50,486,385 to 63,107,981
and the Investor owns, or has the right to own, approximately 20%
of the latter. On a pro forma basis, assuming that the
Investor funds the full $50.0 million
investment, the Company's outstanding fully diluted shares would
increase from the currently fully diluted 50,486,385 to
100,972,770, of which the Investor would own approximately
50%. The latter number is subject to further change to
reflect any additional issuances that increase the number of shares
necessary to provide the Investor with 1% of the fully diluted
capital stock of the Company for each $1.0
million funded by the Investor.
About Tricadia Capital Management, LLC
Tricadia is an investment firm that manages credit-oriented
hedge funds and alternative investment accounts. Founded in 2003,
the firm is headquartered in New
York and has approximately $4.0
billion in assets under management in multi-strategy and
specialized funds and accounts. Tricadia is privately owned and
employs approximately forty people, the majority of which are
investment professionals.
About CV Holdings, Inc.
We have two business units, our legacy business as a commercial
real estate specialty finance company primarily focused on managing
a diversified portfolio of commercial real estate-related loans and
securities, and our current business focused on residential
NPLs.
Our Common Stock is currently quoted on the OTC Markets Group,
or OTC Markets. While not a requirement, the OTC Markets
Group encourages companies having their securities quoted thereon
to provide adequate current information in accordance with its
disclosure guidelines. We will evaluate the need to issue
press releases containing information similar to the information
disclosed herein. We do not undertake any obligation nor do
we give any assurance that we will provide timely periodic
disclosures or any public disclosure at all. The information
provided in this press release is not complete and does not purport
to be complete.
We elected to qualify as a real estate investment trust, or
REIT, for U.S. federal income tax purposes commencing with the
taxable year ended December 31, 2005.
We currently intend to continue to qualify as a REIT. As a REIT, we
generally will not be subject to U.S. federal income tax on that
portion of our income that we distribute to our stockholders for so
long as we continue to qualify as a REIT, including distributing at
least 90% of our annual "REIT taxable income" to our stockholders.
We conduct our operations so as to not be or become regulated as an
investment company under the Investment Company Act of 1940. The
Company has not had federal taxable income since 2007 and does not
expect any federal taxable income in the foreseeable future.
Forward-Looking Information and Other Information
This press release contains forward-looking statements based
upon the Company's beliefs, assumptions and expectations of its
future performance, taking into account all information currently
available. These beliefs, assumptions and expectations can change
as a result of many possible events or factors, not all of which
are known to the Company or are within its control. If a change
occurs, the Company's business, financial condition, liquidity and
results of operations may vary materially from those expressed in
its forward-looking statements.
The factors that could cause actual results to vary from the
Company's forward-looking statements include: the company's ability
to identify attractive investments agreeable to the Company and the
Investor; the success of the Company's current NPL business and JV
with another institutional investor as disclosed in prior releases;
the Company's ability to redeem the Preferred; the availability of
attractive NPL investments; the subsequent investments by the
Investor; the U.S. general economy; the Company's liquidity and
ability to continue to cover its operating cash requirements; the
Company's future operating results; its business operations and
prospects; availability, terms and deployment of short-term and
long-term capital; availability of qualified employees; changes in
interest rates; adverse development in the debt securities, credit
and capital markets, adverse developments in the commercial finance
and real estate markets; performance and financial condition of
borrowers and corporate customers; any future litigation that may
arise; the ultimate resolution of the Company's numerous defaulted
loans; the performance of the Company's joint venture investments;
and the ability to continue as a going concern. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements.
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SOURCE CV Holdings, Inc.
