Benefit Street Partners Realty Trust and Capstead Mortgage Corporation Amend Merger Agreement

September 22, 2021 | Benefit Street Partners Realty Trust, Inc.

Benefit Street Partners Realty Trust, Inc. (the “Company”), Rodeo Sub I, LLC, a wholly-owned subsidiary of the Company (“Merger Sub”), Capstead Mortgage Corporation, (“Capstead”), and Benefit Street Partners L.L.C., (the “Advisor”) entered into First Amendment to Agreement and Plan of Merger (the “Amendment”), which amends that certain Agreement and Plan and Merger (the “Merger Agreement”), dated as of July 25, 2021, by and among the same parties.

The Amendment restructures the terms of the proposed recapitalization of the Company’s common stock as originally contemplated by the Merger Agreement. Pursuant to the original terms of the Merger Agreement, prior to the consummation of the merger contemplated by the Merger Agreement, the Company agreed to effect a one-for-ten reverse stock split (the “Reverse Stock Split) on the Company’s common stock, par value $0.01 per share (the “Common Stock”) such that each outstanding share of Common Stock as of a date to be specified will automatically combine into 1/10th of a share of Common Stock, and the Common Stock would be renamed as “Class A common stock.” Following the Reverse Stock Split, the Company had also agreed to effect a stock dividend on the Class A common stock (the “Stock Dividend”) wherein the Company would have filed Articles Supplementary to the Company’s Articles of Amendment and Restatement designating and classifying a new series of Class B common stock, par value $0.01 per share (“Class B Common Stock”), and distribute nine shares of Class B Common Stock to each holder of Class A common stock.

Under the terms of the Amendment, the recapitalization transaction summarized above was amended such that (i) the Reverse Stock Split was unchanged, except that the Company’s Common Stock will not be renamed, (ii) the Company’s authorized amount of preferred stock, par value $0.01 per share, will be increased from 50,000,000 shares to 100,000,000 shares, and (iii) the Stock Dividend will instead consist of nine shares of a newly designated class of Series F convertible preferred stock, par value $0.01 per share (the “Series F Preferred Stock”) to be issued to each holder of one share of Common Stock as of the record date specified by the Company’s board of directors. The Company agreed to effect steps (ii) and (iii) above by filing with the Maryland State Department of Assessments and Taxation Articles Supplementary to the Company’s Articles of Amendment and Restatement, in the form attached as an exhibit to the Amendment.

The Series F Preferred Stock will receive dividends and vote on an as-converted basis with the Common Stock, but will rank senior to the Common Stock with respect to the distribution of assets upon a liquidation, dissolution or winding up of the Company (other than a liquidation, dissolution or winding up of the Company that results in the automatic conversion of the Series F Preferred Stock into Common Stock). The Series F Preferred Stock will have a liquidation preference of $2.00 per share.

The Series F Preferred Stock will automatically convert, on a one-for-one basis, into shares of Common Stock upon the earlier of (i) the six-month anniversary of the listing of the Common Stock on the New York Stock Exchange (“NYSE”), (ii) the date approved as the conversion date by the Company’s board of directors following a termination of the Merger Agreement, (iii) three business days prior to a liquidation, dissolution or winding up of the Company in the event that the board determines (which determination will be conclusive) that the liquidating distribution per share in respect of such converted share of Series F Preferred Stock (or fractional share) would be in an amount in excess of the liquidation preference of $2.00 per share or (iv) immediately prior to the effective time of a qualifying change of control, provided that the consideration per share payable in connection with such change in control in respect of such converted share of Series F Preferred Stock (or fractional share) is an amount in excess of the liquidation preference of $2.00. The Series F Preferred Stock will not be listed on the NYSE, and therefore holders of Series F Preferred Stock will not be able to sell their shares of Series F Preferred Stock on the NYSE until the automatic conversion of such Series F Preferred Stock into shares of Common Stock.

The parties entered into the Amendment after determining that using convertible preferred stock in the recapitalization instead of Class B Common Stock would more effectively achieve the recapitalization purpose of enhancing the stability of the combined company’s stock price after the closing of the merger.

On September 22, 2021, the Company temporarily suspended the Company’s Amended and Restated Distribution Reinvestment and Stock Purchase Plan (the “DRIP”). As a result, DRIP participants, along with all other holders of the Company’s equity securities, will receive their third quarter 2021 Company dividends in cash. The Company intends to pay the third quarter dividends in October 2021.

Source:  SEC