Item 1.01. Entry into a Material Definitive Agreement.
On January 23, 2020, ARMOUR Residential REIT, Inc. (the "Company") and ARMOUR
Capital Management LP (the "Manager"), the external manager of the Company,
entered into an Underwriting Agreement (the "Underwriting Agreement") with B.
Riley FBR, Inc., as representative of the several underwriters named therein
(collectively, the "Underwriters"), including, but not limited to, BUCKLER
Securities LLC, a member of the Financial Industry Regulatory Authority that is
controlled by the Manager and the Company's executive officers, with respect to
(i) the sale by the Company of 3,000,000 shares (the "Firm Shares") of the
Company's new 7.00% Series C Cumulative Redeemable Preferred Stock ($25.00
liquidation preference per share), $0.001 par value (the "Series C Preferred
Stock"), to the Underwriters with an offering price to the public of $25.00 per
share, and (ii) the grant by the Company to the Underwriters of an option (the
"Option") to purchase all or part of 450,000 additional shares (the "Option
Shares," and together with the Firm Shares, the "Shares") of the Series C
Preferred Stock during the 30-day period following the execution of the
Underwriting Agreement with the same offering price per share to the public to
cover over-allotments. The Company agreed to indemnify the Underwriters against
certain specified types of liabilities, including liabilities under the
Securities Act of 1933, as amended, and to contribute to payments the
Underwriters may be required to make in respect of these liabilities.
On January 24, 2020, the Underwriters exercised the Option to purchase all of
the Option Shares. On January 28, 2020, the Company completed the sale of the
Shares for total gross proceeds of approximately $86,250,000 before deduction of
underwriting discounts and commissions and offering expenses payable by the
Company. The Company intends to use the net proceeds from the offering as a
portion of the funds used to redeem 100% of the outstanding Series B Preferred
Stock, as defined and described below.
In the ordinary course of business the Underwriters or their respective
affiliates have engaged and may in the future engage in various financing,
commercial banking, broker-dealer, borrowing and investment banking services
with, and provide financial advisory services to, the Company and its affiliates
for which they have received or may receive customary fees and expenses. A copy
of the Underwriting Agreement is filed as Exhibit 1.1 hereto and is incorporated
herein by reference. The foregoing description of the Underwriting Agreement and
the transactions contemplated thereby is qualified in its entirety by reference
to Exhibit 1.1.
The Company is also filing this Current Report on Form 8-K to provide legal
opinions regarding the validity of the Shares and the shares of common stock of
the Company, $0.001 par value (the "Common Stock"), issuable upon conversion of
the Shares in accordance with the terms of the Articles Supplementary governing
the Series C Preferred Stock described below, and regarding certain tax matters
with respect to the Company and the Shares, which opinions are attached hereto
as Exhibits 5.1 and 8.1, respectively, and are incorporated herein by reference.
Item 3.03. Material Modifications to Rights of Security Holders.
On January 24, 2020, the Company mailed a notice of full redemption (the
"Notice") of all 8,383,344 issued and outstanding shares of its 7.875% Series B
Cumulative Redeemable Preferred Stock ($25.00 liquidation preference per share,
CUSIP 042315408) (the "Series B Preferred Stock") to the holders of record of
its Series B Preferred Stock as of January 13, 2020. Pursuant to this
redemption, each share of Series B Preferred Stock will be cancelled and
represent solely the right to receive cash in the amount of $25.00 per share of
Series B Preferred Stock on February 27, 2020. Pursuant to the terms of the
Series B Preferred Stock, holders of record of the Series B Preferred Stock on
February 15, 2020 will be entitled to receive the full monthly dividend for
February, which will be the final dividend and will be paid in the regular
course of business on February 27, 2020. The office of the registrar, transfer
agent, redemption agent and disbursing agent for the Series B Preferred Stock is
as follows: Continental Stock Transfer & Trust Company, One State Street, 30th
Floor, New York, NY 10004, Attn: Reorg. Department. For questions regarding the
redemption notice, investors should contact Continental Stock Transfer & Trust
Company by telephone at 800-509-5586. A copy of the Notice for the Series B
Preferred Stock is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On January 28, 2020, the Company filed Articles Supplementary with the State
Department of Assessments and Taxation of the State of Maryland (the
"Department") to designate 10,000,000 shares of the Company's authorized
preferred stock, par value $0.001 per share, as shares of Series C Preferred
Stock with the powers, designations, preferences and other rights as set forth
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therein. The Articles Supplementary became effective on January 28, 2020. A copy
of the Articles Supplementary filed with the Department is filed as Exhibit 3.1
hereto and is incorporated herein by reference.
The Articles Supplementary provides that the Company will pay monthly cumulative
dividends on the Series C Preferred Stock, in arrears, on the 27th day of each
month (provided that if any dividend payment date is not a business day, then
the dividend which would otherwise have been payable on that dividend payment
date may be paid on the next succeeding business day) from, and including, the
date of original issuance of the Series C Preferred Stock at 7.00% of the $25.00
per Share liquidation preference per annum (equivalent to $1.75 per annum per
Share). The Articles Supplementary further provide that dividends will be
payable to holders of record as they appear in the stock records of the Company
for the Series C Preferred Stock at the close of business on the applicable
record date, which shall be the 15th day of each month, whether or not a
business day, in which the applicable dividend payment date falls.
The Series C Preferred Stock will not be redeemable before January 28, 2025,
except under circumstances intended to preserve the Company's qualification as a
real estate investment trust ("REIT") for federal income tax purposes and except
upon the occurrence of a Change of Control (as defined in the Articles
Supplementary). On or after January 28, 2025, upon no less than 30 nor more than
60 days' written notice, the Company may, at its option, redeem any or all of
the shares of the Series C Preferred Stock at $25.00 per Share plus any
accumulated and unpaid dividends to, but not including, the redemption date. In
addition, upon the occurrence of a Change of Control, upon no less than 30 nor
more than 60 days' written notice, the Company may, at its option, redeem any or
all of the Shares of Series C Preferred Stock within 120 days after the first
date on which such Change of Control occurred at $25.00 per share plus any
accumulated and unpaid dividends to, but not including, the redemption date. The
Series C Preferred Stock has no stated maturity, is not subject to any sinking
fund or mandatory redemption and will remain outstanding indefinitely unless
repurchased or redeemed by the Company or converted into the Common Stock in
connection with a Change of Control by the holders of Series C Preferred Stock.
Upon the occurrence of a Change of Control, each holder of Series C Preferred
Stock will have the right (subject to the Company's election to redeem the
Series C Preferred Stock in whole or in part, as described above, prior to the
Change of Control Conversion Date (as defined in the Articles Supplementary)) to
convert some or all of the Series C Preferred Stock held by such holder on the
Change of Control Conversion Date into a number of shares of the Common Stock
per Share of Series C Preferred Stock determined by formula, in each case, on
the terms and subject to the conditions described in the Articles Supplementary,
including provisions for the receipt, under specified circumstances, of
alternative consideration as described in the Articles Supplementary.
There are restrictions on ownership of the Series C Preferred Stock intended to
preserve the Company's qualification as a REIT. Except under limited
circumstances, holders of the Series C Preferred Stock generally do not have any
voting rights.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
1.1 Underwriting Agreement, dated January 23, 2020, among ARMOUR
Residential REIT, Inc., ARMOUR Capital Management LP, and B. Riley
FBR, Inc., as representative of the several underwriters listed on
Schedule A attached thereto. ¬
3.1 Articles Supplementary of 7.00% Series C Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 3.11 to the
Registration Statement on Form 8-A (Reg. No. 001-34766) of ARMOUR
Residential REIT, Inc., filed with the Securities and Exchange
Commission on January 28, 2020.
5.1 Opinion of Holland & Knight LLP regarding the validity of shares
of capital stock. ¬
8.1 Opinion of Mayer Brown LLP regarding tax matters. ¬
99.1 Notice of Full Redemption of the 7.875% Series B Cumulative
Redeemable Preferred Stock. ¬
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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¬ Filed herewith
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