WASHINGTON, Feb. 27, 2015 /PRNewswire/ -- The Federal
Agricultural Mortgage Corporation (Farmer Mac, NYSE: AGM and AGM.A)
and its subsidiary, Farmer Mac II LLC, announced today that Farmer
Mac II LLC intends to redeem all 250,000 outstanding shares of its
non-cumulative perpetual preferred stock (the "Farmer Mac II
Preferred Stock") for a redemption price of $1,000 per share (the par value) on March 30, 2015, which is the initial redemption
date for those securities. The redemption of the Farmer Mac
II Preferred Stock will trigger on the same day the redemption of
all $250 million of the outstanding
related trust securities, called Farm Asset-Linked Capital
Securities, or "FALConS," which represent undivided beneficial
ownership interests in the 250,000 shares of the Farmer Mac II
Preferred Stock. Farmer Mac currently holds $6 million of the outstanding FALConS, which were
purchased in the open market during the second quarter of last
year. The record date for the redemption of the Farmer Mac II
Preferred Stock and the FALConS will be March 16, 2015. Farmer Mac II LLC has also
announced the quarterly dividend of $22.1875 to be paid on each share of Farmer Mac
II Preferred Stock on March 30, 2015
in connection with the redemption.
Farmer Mac implemented a capital structure initiative last year
designed to enhance its Tier 1 capital position. Under this
initiative, during the first half of 2014 Farmer Mac issued
$150 million in aggregate in two
series of non-cumulative preferred stock that both qualify as Tier
1 capital and have a current after-tax dividend expenditures of
approximately $9.7 million
annually. Farmer Mac intends to use the proceeds of these
preferred stock offerings and cash on hand to cause Farmer Mac II
LLC to redeem all of the outstanding shares of Farmer Mac II
Preferred Stock, which does not qualify as Tier 1 capital and has
had an after-tax dividend expenditures of approximately
$14.1 million annually.
Farmer Mac's President and Chief Executive Officer Tim Buzby stated, "We are pleased to announce
our notice of intent to have all $250
million of the outstanding FALConS redeemed on
March 30, which
will complete our capital restructuring plan. Annual
total savings of after-tax preferred dividend expenditures will be
approximately $4.4 million, providing
significant value to our common stockholders."
About Farmer Mac
Farmer Mac is the stockholder-owned
company created to deliver capital and increase lender competition
for the benefit of American agriculture and rural communities.
Additional information about Farmer Mac is available on Farmer
Mac's website at www.farmermac.com.
About Farmer Mac II LLC
Farmer Mac II LLC is a
Delaware limited liability
company, in which Farmer Mac owns all of the common equity, that
operates Farmer Mac's USDA Guarantees line of business of
purchasing and holding USDA-guaranteed portions of loans.
Additional information about Farmer Mac II LLC is available on its
website at www.farmermac2.com.
Forward-Looking Statements
In addition to historical information, this release includes
forward-looking statements that reflect management's current
expectations as to Farmer Mac's future financial results, business
prospects, and business developments. Management's
expectations for Farmer Mac's future necessarily involve a number
of assumptions and estimates and the evaluation of risks and
uncertainties. Various factors or events could cause Farmer
Mac's actual results to differ materially from the expectations as
expressed or implied by the forward-looking statements, including
uncertainties regarding:
- the availability to Farmer Mac of debt and equity financing
and, if available, the reasonableness of rates and terms;
- legislative or regulatory developments that could affect Farmer
Mac or its sources of business;
- fluctuations in the fair value of assets held by Farmer Mac and
its subsidiaries;
- the rate and direction of development of the secondary market
for agricultural mortgage and rural utilities loans, including
lender interest in Farmer Mac credit products and the secondary
market provided by Farmer Mac;
- the general rate of growth in agricultural mortgage and rural
utilities indebtedness;
- the impact of economic conditions, including the effects of
drought and other weather-related conditions and fluctuations in
agricultural real estate values, on agricultural mortgage lending
and borrower repayment capacity;
- developments in the financial markets, including possible
investor, analyst, and rating agency reactions to events involving
government-sponsored enterprises, including Farmer Mac;
- changes in the level and direction of interest rates, which
could, among other things, affect the value of collateral securing
Farmer Mac's agricultural mortgage loan assets; and
- volatility in commodity prices relative to costs of production
and/or export demand for U.S. agricultural products.
Other risk factors are discussed in Farmer Mac's Annual Report
on Form 10-K for the year ended December 31, 2013 (filed
with the SEC on March 13, 2014),
Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (filed with the SEC on
May 12, 2014), Quarterly Report on
Form 10-Q for the quarter ended June 30,
2014 (filed with the SEC on August
11, 2014), and Quarterly Report on Form 10-Q for the quarter
ended September 30, 2014, (filed with
the SEC on November 10, 2014).
In light of these potential risks and uncertainties, no undue
reliance should be placed on any forward-looking statements
expressed in this release. The forward-looking
statements contained in this release represent management's
expectations as of the date of this release. Farmer Mac
undertakes no obligation to release publicly the results of
revisions to any forward-looking statements included in this
release to reflect new information or any future events or
circumstances, except as the SEC otherwise requires.
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SOURCE Farmer Mac