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Mergers On, Off & Pending

Mergers On, Off & PendingRecent mergers and corporate activity

June 13, 2008

By SAM GARCIA

Shareholders of a troubled real estate investment trust have authorized the issuance of 3.5 billion additional shares, while shareholders of the nation’s biggest mortgage lender are being advised to approve the acquisition of the company. Other recent corporate activity in the mortgage sector included a government-sponsored enterprise downgrade, a new REIT president and a delay in a series of planned mortgage acquisitions.

Standard & Poor’s Ratings Services upgraded the outlook for the Federal Home Loan Banks of Seattle and Chicago to positive, the FHLBanks Office of Finance said Thursday. But the long-term counterparty credit rating for the FHLBank of Chicago was downgraded to AA. The actions were based on the combined financial strength of the entire FHLBank System and its GSE status.

IndyMac Bancorp Inc. is facing its second investor lawsuit this week.

A lawsuit seeking class action status was filed in U.S. District Court for the Central District of California on behalf of investors who purchased shares of the Pasadena, Calif.-based company between Aug. 16, 2007, and May 12, 2008, Schatz Nobel Izard P.C. announced yesterday. The company is accused of misleading investors about its holdings and operations, in violation of federal securities laws. Also named in the complaint are Chairman and Chief Executive Officer Michael W. Perry and Chief Financial Officer A. Scott Keys.

Two days earlier, Coughlin Stoia Geller Rudman & Robbins LLP announced it filed an investor lawsuit against IndyMac.

Donald J. Meyer has been appointed CEO of American Mortgage Acceptance Co., a press release yesterday said. Meyer replaces J. Larry Duggins, who retires on June 30 “to attend divinity school at Southern Methodist University and devote his time to helping launch non-profit youth-oriented foundations.”

The New York-based REIT also said it would forego a dividend declaration on its second quarter 7.25% Series A cumulative convertible preferred shares and common shares.

Following its announcement that shareholder equity has been virtually wiped out from a $3.3 billion first-quarter loss, stockholders of Thornburg Mortgage Inc. approved a highly dilutive charter amendment to increase the number of authorized shares of capital stock from 500 million to 4 billion, an announcement Thursday said.

The Santa Fe, N.M.-based REIT also obtained approval “to modify the terms of each of the company’s existing series of preferred stock to, among other things, remove restrictive covenants that currently prohibit the company from purchasing preferred stock when all cumulative dividends on the related series of preferred stock have not been paid in full, make the dividend payments on the preferred stock non-cumulative and eliminate all accrued but unpaid dividends, and eliminate substantially all voting rights of the preferred stockholders.”

Countrywide Financial Corp. said yesterday that ISS/RiskMetrics Group recommended that its shareholders approve Bank of America Corp.’s proposed acquisition of the company at the June 25 special stockholder meeting. The deal, which last week received the blessing of the Federal Reserve Board, is expected to close in September.

Countrywide originated $408.2 billion during 2007 — more than any other U.S. lender.

After a seemingly endless stream of announcements boasting how several pending acquisitions will create a consumer lending powerhouse, Fortress Financial Group Inc. issued another press release indicating it has decided not to complete these acquisitions until it resolves “all outstanding issues such as the distribution of Hunt Gold Corporation Stock Dividends had been completed.”

“The company has been advised by its professional advisors that these outstanding issues will be resolved within days,” the press release said.

Fortress, based in New York, also said that once it announces the acquisitions, it will begin buying back shares, currently trading at $0.0001, to bring its share price above 1 cent. The initial round of share buybacks will involve $5 million and reduce outstanding shares by 30 percent. The buyback will be funded through utilization of its “substantial gold mining investment portfolio.”

Goldman Sachs Commercial Mortgage Capital L.P., a full-service commercial mortgage lender, announced it has taken a minority interest in Bulls Capital Partners, a Fannie Mae-delegated multifamily lender and servicer. Goldman will originate loans for Bulls.

Terms of the deal were not disclosed.

Bulls Capital, a joint venture between Goldman and Bulls Multifamily LLC, is based in Vienna, Va.

John Folsom, On Behalf of Himself and All Others Similarly Situated vs. IndyMac Bancorp Inc., Michael W. Perry and A. Scott Keys

 

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com.

e-mail: mtgsam@aol.com


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