Attached files
file | filename |
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8-K - FEDERAL AGRICULTURAL MORTGAGE CORP | v172150_8k.htm |
EX-99.1 - FEDERAL AGRICULTURAL MORTGAGE CORP | v172150_ex99-1.htm |
NEWS
FOR IMMEDIATE
RELEASE
|
CONTACT
|
January
25, 2010
|
Richard
Eisenberg
|
|
(Investor
Inquiries)
|
Mary
Waters
|
|
(Media
Inquiries)
|
|
202-872-7700
|
Farmer
Mac Raises $250 Million of Capital
–Company
Repurchasing Preferred Stock–
Washington, DC – The Federal
Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A) today
reported that it has raised additional capital in a private offering of shares
of non-cumulative perpetual preferred stock of Farmer Mac II LLC, a recently
organized Delaware limited liability company in which Farmer Mac owns all of the
common equity. Farmer Mac II LLC is now operating the Farmer Mac II
business that has operated since 1992 purchasing and holding USDA-guaranteed
loans. Farmer Mac is using the proceeds from the sale of the
$250 million of Farmer Mac II LLC preferred stock to repurchase and retire
$150 million of Farmer Mac’s currently outstanding Series B preferred stock
and to further enhance Farmer Mac’s regulatory capital position.
Farmer
Mac’s President and Chief Executive Officer Michael Gerber said, “Today’s
transaction further strengthens Farmer Mac's financial position in support of
our core business.
It provides Farmer Mac with additional capital at a significantly lower
cost. In the fall of 2008, our business partners invested in Farmer
Mac when we needed to raise capital. This sale of our subsidiary’s
preferred stock allows us to pay back those business partners in full while
further strengthening our balance sheet to support the continued fulfillment of
our Congressional mission.”
The
stated dividend rate on the new $250 million of preferred stock is 8.875
percent, and, after consideration of the consolidated tax benefits to Farmer
Mac, the net effective cost is 5.77 percent. As a result, the
net cost on Farmer Mac’s consolidated financial statements will be approximately
$3.6 million per quarter, or $14.4 million per year. The 8.875
percent dividend rate is in effect until March 30, 2015 when the preferred stock
becomes callable and there is a rate step-up. The quarterly and
annual cost of the existing $150 million of Series B preferred stock was $4.5
million and $18.0 million, respectively, based on the 2010 dividend rate of
12 percent, which was scheduled to increase to 14 percent at the end of
2010 and 16 percent in 2011. The benefit of this reduction in
dividend costs can be used to further capitalize new growth and improves Farmer
Mac’s stockholder value.
Mr. Gerber
further stated, “With the completion of this transaction, Farmer Mac is well
positioned to actively partner with agricultural and rural utilities lenders, as
well as lenders participating in USDA’s guaranteed loan programs, to provide the
needed capital and liquidity to Rural America.”
This
press release does not constitute an offer to sell, or the solicitation of an
offer to buy, any of the securities referred to herein.
Forward-Looking
Statements
In
addition to historical information, this release includes forward-looking
statements that reflect management’s current expectations for Farmer Mac’s
future financial results, business prospects and business
developments. Management’s expectations for Farmer Mac’s future
necessarily involve a number of assumptions and estimates and the evaluation of
risks and uncertainties. Various factors or events could cause Farmer
Mac’s actual results to differ materially from the expectations as expressed or
implied by the forward-looking statements, including uncertainties
regarding: (1) the availability of reasonable rates and terms of debt
financing to Farmer Mac; (2) fluctuations in the fair value of assets held by
Farmer Mac, particularly in volatile markets; (3) legislative or regulatory
developments that could affect Farmer Mac; (4) the rate and direction of
development of the secondary market for agricultural mortgage and rural
utilities loans, including lender interest in Farmer Mac credit products and the
Farmer Mac secondary market; (5) the general rate of growth in agricultural
mortgage and rural utilities indebtedness; (6) borrower preferences for
fixed rate agricultural mortgage indebtedness; (7) increases in general and
administrative expenses attributable to changes in the business and regulatory
environment, including the hiring of additional personnel with expertise in key
functional areas; (8) the severity and duration of current economic and
financial conditions generally
and within the agricultural and rural utilities sectors in particular;
(9) developments in the financial markets, including possible investor,
analyst and rating agency reactions to events involving GSEs, including Farmer
Mac; and (10) the willingness of investors to invest in Farmer Mac Guaranteed
Securities. Other
risk factors are discussed in Farmer Mac’s Annual Report on Form 10-K for
the year ended December 31, 2008, as filed with the SEC on March 16, 2009, and
in Farmer Mac’s Quarterly Report on Form 10-Q for the quarter ended September
30, 2009, as filed with the SEC on November 9, 2009. The
forward-looking statements contained in this release represent management’s
expectations as of the date of this release. Farmer Mac undertakes no
obligation to release publicly the results of revisions to any forward-looking
statements included in this release to reflect new information or any future
events or circumstances, except as otherwise mandated by the SEC.
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Farmer
Mac is a stockholder-owned instrumentality of the United States chartered by
Congress to establish a secondary market for agricultural real estate and rural
housing mortgage loans and rural utilities loans and to facilitate capital
market funding for USDA-guaranteed farm program and rural development
loans. Farmer Mac’s Class C non-voting and Class A voting common
stocks are listed on the New York Stock Exchange under the symbols AGM and
AGM.A, respectively.
* * *
*
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