Redwood Trust Raises $175M from Preferred Stock Offering

TL;DR

RWT closed a $175M preferred stock offering on 10/9 to fund operations.

AI Summary

On October 9, 2024, Redwood Trust, Inc. announced the closing of its previously announced underwritten public offering of 9.125% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock. The company sold 7,000,000 shares of Series A Preferred Stock, raising gross proceeds of approximately $175 million before deducting underwriting discounts and commissions. Redwood Trust intends to use the net proceeds for general corporate purposes, including funding its business activities and potentially repaying debt.

Why It Matters

This capital raise provides Redwood Trust with significant funding for its operations and strategic initiatives, potentially strengthening its financial position.

Risk Assessment

Risk Level: medium — The company is issuing preferred stock, which carries its own set of risks related to dividends and redemption, and the proceeds are for general corporate purposes, indicating ongoing operational needs.

Key Numbers

• $175 million — Gross Proceeds (Raised from the sale of Series A Preferred Stock.)
• 7,000,000 — Shares Sold (Number of Series A Preferred Stock shares sold.)
• 9.125% — Dividend Rate (Fixed rate for Series A Preferred Stock before floating rate conversion.)

Key Players & Entities

• Redwood Trust, Inc. (company) — Registrant
• 9.125% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (security) — Offered security
• $175 million (dollar_amount) — Gross proceeds from offering
• October 9, 2024 (date) — Closing date of offering

FAQ

Key Financial Figures

• $0.01 — ch registered Common Stock, par value $0.01 per share RWT New York Stock Exchange
• $39,760,000 — wood Trust, Inc. (the "Company") issued $39,760,000 aggregate principal amount of the Compa
• $247,170,000 — incipal amount of outstanding Notes was $247,170,000. While the Notes are initially trading
• $1,000 — s is 95.6823 shares of Common Stock per $1,000 principal amount of Notes, which is equ
• $10.45 — to a conversion price of approximately $10.45 per share. The conversion price represe
• $100.0 million — Provisional Redemption unless at least $100.0 million aggregate principal amount of Notes are
• $33.1 million — , the Company repurchased approximately $33.1 million aggregate principal amount of 5.75% exc
• $174.3 million — lowing these repurchases, approximately $174.3 million in aggregate principal amount of the 20

Filing Documents

• tm2425835d2_8k.htm (8-K) — 50KB
• tm2425835d2_ex99-1.htm (EX-99.1) — 12KB
• 0001104659-24-108060.txt ( ) — 299KB
• rwt-20241009.xsd (EX-101.SCH) — 4KB
• rwt-20241009_def.xml (EX-101.DEF) — 27KB
• rwt-20241009_lab.xml (EX-101.LAB) — 38KB
• rwt-20241009_pre.xml (EX-101.PRE) — 26KB
• tm2425835d2_8k_htm.xml (XML) — 7KB

03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a

Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant. On October 11, 2024, Redwood Trust, Inc. (the "Company") issued $39,760,000 aggregate principal amount of the Company's 7.75% Convertible Senior Notes due 2027 (the "Notes") pursuant to a purchase agreement (the "Purchase Agreement") with the representative (the "Representative") of the several initial purchasers (the "Initial Purchasers") of the Notes (the "Offering"). As used herein, the term "Notes" includes the Initial Notes (as defined below), unless the context requires otherwise. The Notes were issued as a reopening of, and are part of the same series as, the 7.75% convertible senior notes due 2027 that the Company originally issued in June 2022 (the "Initial Notes"). Upon completion of the Offering, the aggregate principal amount of outstanding Notes was $247,170,000. While the Notes are initially trading under a Rule 144A CUSIP number, the Company expects that once de-legended, the Notes will trade with same CUSIP number as the Initial Notes. The Company issued the Notes under an indenture dated as of June 9, 2022 (the "Indenture") between the Company and Wilmington Trust, National Association, a national banking association, as trustee (the "Trustee"). The Notes bear interest at a rate of 7.75% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2024. The Notes are the general unsecured obligations of the Company and rank equal in right of payment with the other existing and future senior unsecured indebtedness of the Company and senior in right of payment to any indebtedness of the Company that is contractually subordinated to the Notes. The Notes, however, are effectively subordinated in right of payment to the existing and future secured indebtedness of the Company to the extent of the value of the collateral securing such indebtedness, and structurally subordinated t

02. Unregistered Sales of Equity Securities

Item 3.02. Unregistered Sales of Equity Securities. The disclosure set forth in Item 2.03 above is incorporated by reference into this Item 3.02. The Notes were issued to the Initial Purchasers in reliance upon Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), in transactions not involving any public offering. The Notes were resold by the Initial Purchasers to persons whom the Initial Purchasers reasonably believe are "qualified institutional buyers," as defined in, and in accordance with, Rule 144A under the Securities Act. Any shares of the Company's Common Stock that may be issued upon conversion of the Notes will be issued in reliance upon Section 3(a)(9) of the Securities Act as involving an exchange by the Company exclusively with its security holders. Initially, a maximum of 4,279,869 shares of the Company's Common Stock may be issued upon conversion of the Notes, based on the initial maximum conversion rate of 107.6426 shares of Common Stock per $1,000 principal amount of Notes, which is subject to customary anti-dilution adjustment provisions.

01. Other Events

Item 8.01. Other Events. Purchase Agreement On October 9, 2024, the Company entered into the Purchase Agreement with the Representative of the several Initial Purchasers named therein. Subject to the terms and conditions of the Purchase Agreement, the Company agreed to sell to the Initial Purchasers, and the Initial Purchasers agreed to purchase from the Company, $39,760,000 aggregate principal amount of Notes. Pursuant to the terms of the Purchase Agreement, the parties have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. Pursuant to the terms of the Purchase Agreement, all of the Company's directors and executive officers also agreed not to sell or transfer any Common Stock held by them for 30 days after October 9, 2024 without first obtaining the written consent of the Representative on behalf of the Initial Purchasers, subject to certain exceptions. Notes Press Release On October 9, 2024, the Company issued a press release relating to the pricing of the Offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 8.01. 2025 Note Repurchases On October 11, 2024, the Company repurchased approximately $33.1 million aggregate principal amount of 5.75% exchangeable senior notes due 2025 issued by one of its subsidiaries ("2025 Notes") in privately negotiated transactions effected through two of the Initial Purchasers or their affiliates, as the Company's agent. Following these repurchases, approximately $174.3 million in aggregate principal amount of the 2025 Notes remain outstanding. Neither this Current Report on Form 8-K nor the press release constitutes an offer to repurchase any 2025 Notes or to sell, or the solicitation of an offer to buy, the Notes or the shares of the Company's Common Stock, if any, issuable upon conversio

Financial Statements and Exhibits

Financial Statements and Exhibits. (d) Exhibits Exhibit 99.1 Press Release dated October 9, 2024 Exhibit 104 Cover Page Interactive Data File (embedded within the inline XBRL document)

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: October 11, 2024 REDWOOD TRUST, INC. By: /s/ Brooke E. Carillo Name: Brooke E. Carillo Title: Chief Financial Officer

View Full Filing

View this 8-K filing on SEC EDGAR