Chimera Investment Corporation Announces Public Offering of Convertible Senior Notes

NEW YORK--(BUSINESS WIRE)--Chimera Investment Corporation (NYSE: CIM) (the “Company”) today announced that it has commenced an underwritten public offering of $250.0 million aggregate principal amount of convertible senior notes due 2023 (the “Notes”), subject to market and other conditions. The Company expects to grant the underwriter a 13-day option to purchase up to an additional $37.5 million aggregate principal amount of the Notes to cover over-allotments. The Notes will be senior unsecured obligations of the Company.

In connection with the offering of the Notes, the Company expects to enter into one or more privately negotiated capped call transactions with the underwriter, and/or its affiliates or other financial institutions (the “option counterparties”). The capped call transactions are expected generally to reduce potential dilution to the Company’s common stock (the “Common Stock”) upon any conversion of Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap. If the underwriter exercises its over-allotment option, the Company expects to enter into additional capped call transactions with the option counterparties.

The Company intends to use a portion of the net proceeds of the offering to pay the cost of the capped call transactions and the remainder to finance the acquisition of mortgage assets including residential mortgage loans, non-Agency RMBS, Agency RMBS, Agency and non-Agency CMBS and other targeted assets, and for other general corporate purposes such as repayment of outstanding indebtedness or to pay down other liabilities, working capital and for liquidity needs.

In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to the Common Stock concurrently with or shortly after the pricing of the Notes. This activity could increase (or reduce the size of any decrease in) the market price of the Common Stock or the Notes at that time.

In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Common Stock and/or purchasing or selling the Common Stock or other securities of the Company in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so during any observation period related to a conversion of Notes). This activity could also cause or avoid an increase or a decrease in the market price of the Common Stock or the Notes, which could affect the ability of holders to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of Notes, it could affect the number of shares of Common Stock and value of the consideration that holders will receive upon conversion of the Notes.

The Notes will be senior unsecured obligations of the Company, pay interest semiannually in cash on April 1 and October 1 of each year and will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day prior to the maturity date into shares of Common Stock. The Notes will mature on April 1, 2023, unless earlier converted, redeemed or repurchased in accordance with their terms.

The Company will not have the right to redeem the Notes prior to maturity, except to the extent necessary to preserve its status as a real estate investment trust, or REIT, for U.S. federal income tax purposes, the Company may redeem all or part of the Notes at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

Holders of Notes may require the Company to purchase their Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of purchase.

Credit Suisse Securities (USA) LLC is acting as book-running manager for the offering.

This offering is being made pursuant to an effective shelf registration statement and prospectus and related preliminary prospectus supplement filed by the Company with the Securities and Exchange Commission. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Copies of the prospectus supplement and related prospectus for this offering may be obtained by contacting Credit Suisse Securities (USA) LLC, Eleven Madison Avenue, 3rd floor, New York, NY 10010, Attn: Prospectus Department, telephone: [phone], e-mail: [e-mail].

About Chimera Investment Corporation

We are a publicly traded REIT that is primarily engaged in the business of investing directly or indirectly through our subsidiaries, on a leveraged basis, in a diversified portfolio of real estate assets, including mortgage loans, Agency RMBS, Non-Agency RMBS, Agency CMBS, and other real estate assets.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “target,” “assume,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believe,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. These forward-looking statements include, but are not limited to, statements regarding the Company’s offering of Notes and the use of proceeds from the offering.

Investors are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additional information concerning these and other risk factors is contained in the Company’s most recent filings with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements concerning the Company or matters attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.