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UWM finalizes $400M rights offering as part of larger capital raise
The subscription price is set at the greater of $2 per share or 85% of the volume-weighted average stock price over Oct. 27 to Nov. 9, and Oaktree and the Ishbia parties backstop any shortfall.
UWM Holdings Corp., the parent of United Wholesale Mortgage, has finalized the terms of a 200 million-share rights offering for its Class A common stock, targeting at least $400 million in new capital, the company said.
The rights offering is expected to begin Oct. 5, with the subscription price set at the greater of $2 per share or 85% of the volume-weighted average price of UWM’s Class A stock over 10 trading days from Oct. 27 through Nov. 9. If gross proceeds fall short of $400 million, Oaktree has the option and the Ishbia parties have the obligation to purchase additional securities to cover the unfunded portion.
UWM said the backstop securities can be issued either as Class A common stock at the same subscription price as the rights offering, or as junior perpetual non-convertible preferred stock paired with warrants. The warrants would let holders buy an aggregate number of Class A shares equal to 20% of the initial liquidation preference of the preferred stock, matching the structure of an August preferred investment.
The rights offering is part of UWM’s larger $2.05 billion capital raise with Oaktree Capital Management and the Ishbia family, via SFS Group Capital LLC, announced in August. In that earlier transaction, Oaktree invested $1.5 billion and SFS Group invested $150 million. UWM also noted its bid to acquire Two Harbors Investment Corp. to CrossCountry Mortgage was lost, after analysts raised leverage concerns, and it recorded a $603 million loss on interest rate derivatives tied to hedging the Two Harbors MSR portfolio.